MANILA PRINCE HOTEL, petitioner, vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, respondents.
D E C I S I O N
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987
Constitution, i.e., in the grant of rights, privileges, and
concessions covering the national economy and patrimony, the State shall give
preference to qualified Filipinos,[1] is invoked by petitioner in its bid to
acquire 51% of the shares of the Manila Hotel Corporation (MHC) which owns the
historic Manila Hotel. Opposing,
respondents maintain that the provision is not self-executing but requires an
implementing legislation for its enforcement.
Corollarily, they ask whether the 51% shares form part of the national
economy and patrimony covered by the protective mantle of the Constitution.
The controversy arose when respondent Government Service
Insurance System (GSIS), 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 and outstanding shares
of respondent MHC. The winning bidder,
or the eventual “strategic partner,” is to provide management expertise
and/or an international marketing/reservation system, and financial support to
strengthen the profitability and performance of the Manila Hotel.[2] 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.
Pertinent provisions of the bidding rules prepared by respondent
GSIS state -
I. EXECUTION OF THE
NECESSARY CONTRACTS WITH GSIS/MHC -
1. The Highest Bidder must
comply with the conditions set forth below by October 23, 1995 (reset to
November 3, 1995) or the Highest Bidder will lose the right to purchase the
Block of Shares and GSIS will instead offer the Block of Shares to the other
Qualified Bidders:
a. The Highest Bidder must negotiate
and execute with the GSIS/MHC the Management Contract, International
Marketing/Reservation System Contract or other type of contract specified by
the Highest Bidder in its strategic plan for the Manila Hotel x x x x
b. The Highest Bidder must
execute the Stock Purchase and Sale Agreement with GSIS x x x x
K. DECLARATION OF THE
WINNING BIDDER/STRATEGIC PARTNER -
The Highest Bidder will be declared the Winning Bidder/Strategic
Partner after the following conditions are met:
a. Execution of the necessary
contracts with GSIS/MHC not later than October 23, 1995 (reset to November 3,
1995); and
b. Requisite approvals from
the GSIS/MHC and COP (Committee on Privatization)/ OGCC (Office of the
Government Corporate Counsel) are obtained.”[3]
Pending the declaration of Renong Berhard as the winning
bidder/strategic partner and the execution of the necessary contracts,
petitioner in a letter to respondent GSIS dated 28 September 1995 matched the
bid price of P44.00 per share tendered by Renong Berhad.[4] In a subsequent letter dated 10 October 1995
petitioner sent a manager’s check issued by Philtrust Bank for Thirty-three
Million Pesos (P33,000,000.00) as Bid Security to match the bid of
the Malaysian Group, Messrs. Renong Berhad x x x x[5] which respondent GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has
disregarded the tender of the matching bid and that the sale of 51% of the MHC
may be hastened by respondent GSIS and consummated with Renong Berhad,
petitioner came to this Court on prohibition and mandamus. On 18 October 1995 the Court issued a
temporary restraining order enjoining respondents from perfecting and
consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En
Banc after it was referred to it by the First Division. The case was then set for oral arguments
with former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J.,
as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII,
of the 1987 Constitution 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. It is a proud legacy of an earlier
generation of Filipinos who believed in the nobility and sacredness of
independence and its power and capacity to release the full potential of the
Filipino people. To all intents and
purposes, it has become a part of the national patrimony.[6] 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. Thus, any transaction involving 51% of the
shares of stock of the MHC is clearly covered by the term national economy, to
which Sec. 10, second par., Art. XII, 1987 Constitution, applies.[7]
It is also the thesis of petitioner that since Manila Hotel is
part of the national patrimony and its business also unquestionably part of the
national economy petitioner should be preferred after it has matched the bid
offer of the Malaysian firm. For the
bidding rules mandate that if for any reason, the Highest Bidder cannot be
awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders
that have validly submitted bids provided that these Qualified Bidders are
willing to match the highest bid in terms of price per share.[8]
Respondents except. They
maintain that: First, Sec. 10, second par., Art. XII, of the 1987
Constitution is merely a statement of principle and policy since it is not a
self-executing provision and requires implementing legislation(s) x x x x Thus,
for the said provision to operate, there must be existing laws “to lay down
conditions under which business may be done.”[9]
Second, granting that this provision is
self-executing, Manila Hotel does not fall under the term national patrimony
which only refers to lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna and all marine wealth in its
territorial sea, and exclusive marine zone as cited in the first and second
paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents, while petitioner speaks of the guests
who have slept in the hotel and the events that have transpired therein which
make the hotel historic, these alone do not make the hotel fall under the patrimony
of the nation. What is more, the
mandate of the Constitution is addressed to the State, not to respondent GSIS
which possesses a personality of its own separate and distinct from the
Philippines as a State.
Third, granting that the Manila Hotel forms part of
the national patrimony, the constitutional provision invoked is still
inapplicable since what is being sold is only 51% of the outstanding shares of
the corporation, not the hotel building nor the land upon which the building
stands. Certainly, 51% of the equity of
the MHC cannot be considered part of the national patrimony. Moreover, if the disposition of the shares
of the MHC is really contrary to the Constitution, petitioner should have
questioned it right from the beginning and not after it had lost in the
bidding.
Fourth, the reliance by petitioner on par. V.,
subpar. J. 1., of the bidding rules which provides that if for any reason,
the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this
to the other Qualified Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest bid in terms of price
per share, is misplaced.
Respondents postulate that the privilege of submitting a matching bid
has not yet arisen since it only takes place if for any reason, the Highest
Bidder cannot be awarded the Block of Shares. Thus the submission by petitioner of a matching bid is premature
since Renong Berhad could still very well be awarded the block of shares and
the condition giving rise to the exercise of the privilege to submit a matching
bid had not yet taken place.
Finally, the prayer for prohibition grounded on
grave abuse of discretion should fail since respondent GSIS did not exercise
its discretion in a capricious, whimsical manner, and if ever it did abuse its
discretion it was not so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the petition for mandamus should
fail as petitioner has no clear legal right to what it demands and respondents
do not have an imperative duty to perform the act required of them by
petitioner.
We now resolve. A
constitution is a system of fundamental laws for the governance and
administration of a nation. It is
supreme, imperious, absolute and unalterable except by the authority from which
it emanates. It has been defined as the
fundamental and paramount law of the nation.[10] It prescribes the permanent framework of a
system of government, assigns to the different departments their respective
powers and duties, and establishes certain fixed principles on which government
is founded. The fundamental conception
in other words is that it is a supreme law to which all other laws must conform
and in accordance with which all private rights must be determined and all
public authority administered.[11] Under the doctrine of constitutional
supremacy, if a law or contract violates any norm of the constitution that law
or contract whether promulgated by the legislative or by the executive branch
or entered into by private persons for private purposes is null and void and
without any force and effect. Thus, since
the Constitution is the fundamental, paramount and supreme law of the nation,
it is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations of
policies and principles. Their provisions
command the legislature to enact laws and carry out the purposes of the framers
who merely establish an outline of government providing for the different
departments of the governmental machinery and securing certain fundamental and
inalienable rights of citizens.[12] A provision which lays down a general
principle, such as those found in Art. II of the 1987 Constitution, is usually
not self-executing. But a provision
which is complete in itself and becomes operative without the aid of
supplementary or enabling legislation, or that which supplies sufficient rule
by means of which the right it grants may be enjoyed or protected, is
self-executing. Thus a constitutional
provision is self-executing if the nature and extent of the right conferred and
the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no
language indicating that the subject is referred to the legislature for action.[13]
As against constitutions of the past, modern constitutions have
been generally drafted upon a different principle and have often become in
effect extensive codes of laws intended to operate directly upon the people in
a manner similar to that of statutory enactments, and the function of
constitutional conventions has evolved into one more like that of a legislative
body. Hence, unless it is expressly
provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are
self-executing. If the constitutional
provisions are treated as requiring legislation instead of self-executing, the
legislature would have the power to ignore and practically nullify the mandate
of the fundamental law.[14] This can be cataclysmic. That is why the prevailing view is, as it
has always been, that -
x x x x in case of doubt, the Constitution should be considered
self-executing rather than non-self-executing x x x x Unless the contrary is clearly
intended, the provisions of the Constitution should be considered
self-executing, as a contrary rule would give the legislature discretion to
determine when, or whether, they shall be effective. These provisions would be subordinated to the will of the
lawmaking body, which could make them entirely meaningless by simply refusing
to pass the needed implementing statute.[15]
Respondents argue that Sec. 10, second par., Art. XII, of the
1987 Constitution is clearly not self-executing, as they quote from discussions
on the floor of the 1986 Constitutional Commission -
MR. RODRIGO. Madam
President, I am asking this question as the Chairman of the Committee on
Style. If the wording of “PREFERENCE”
is given to QUALIFIED FILIPINOS,” can it be understood as a preference to
qualified Filipinos vis-a-vis
Filipinos who are not qualified. So,
why do we not make it clear? To
qualified Filipinos as against aliens?
THE PRESIDENT. What is the
question of Commissioner Rodrigo? Is it
to remove the word “QUALIFIED?”
MR. RODRIGO. No, no, but
say definitely “TO QUALIFIED FILIPINOS” as against whom? As against aliens or over aliens ?
MR. NOLLEDO. Madam
President, I think that is understood.
We use the word “QUALIFIED” because the existing laws or prospective
laws will always lay down conditions under which business may be done. For example, qualifications on capital,
qualifications on the setting up of other financial structures, et cetera (underscoring supplied
by respondents).
MR. RODRIGO. It is just a
matter of style.
MR. NOLLEDO. Yes.[16]
Quite apparently, Sec. 10, second par., of Art XII is couched in
such a way as not to make it appear that it is non-self-executing but simply
for purposes of style. But, certainly,
the legislature is not precluded from enacting further laws to enforce the
constitutional provision so long as the contemplated statute squares with the
Constitution. Minor details may be left
to the legislature without impairing the self-executing nature of constitutional
provisions.
In self-executing constitutional provisions, the legislature may
still enact legislation to facilitate the exercise of powers directly granted
by the constitution, further the operation of such a provision, prescribe a
practice to be used for its enforcement, provide a convenient remedy for the
protection of the rights secured or the determination thereof, or place
reasonable safeguards around the exercise of the right. The mere fact that legislation may
supplement and add to or prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision ineffective in the
absence of such legislation. The
omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not
intended to be self-executing. The rule
is that a self-executing provision of the constitution does not necessarily
exhaust legislative power on the subject, but any legislation must be in harmony
with the constitution, further the exercise of constitutional right and make it
more available.[17]
Subsequent legislation however does not necessarily mean that the subject
constitutional provision is not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec.
10, second par., of Art. XII is implied from the tenor of the first and third
paragraphs of the same section which undoubtedly are not self-executing.[18] The argument is flawed. If the first and third paragraphs are not
self-executing because Congress is still to enact measures to encourage the
formation and operation of enterprises fully owned by Filipinos, as in the
first paragraph, and the State still needs legislation to regulate and exercise
authority over foreign investments within its national jurisdiction, as in the
third paragraph, then a fortiori, by the same logic, the second
paragraph can only be self-executing as it does not by its language require any
legislation in order to give preference to qualified Filipinos in the grant of
rights, privileges and concessions covering the national economy and
patrimony. A constitutional provision
may be self-executing in one part and non-self-executing in another.[19]
Even the cases cited by respondents holding that certain
constitutional provisions are merely statements of principles and policies,
which are basically not self-executing and only placed in the Constitution as
moral incentives to legislation, not as judicially enforceable rights - are
simply not in point. Basco v.
Philippine Amusements and Gaming Corporation[20]
speaks of constitutional provisions on
personal dignity,[21] the sanctity of family life,[22] the vital role of the youth in
nation-building,[23] the promotion of social justice,[24] and the values of education.[25]
Tolentino v. Secretary of Finance[26]
refers to constitutional provisions on
social justice and human rights[27] and on education.[28] Lastly, Kilosbayan, Inc. v. Morato[29] cites provisions on the promotion of general
welfare,[30] the sanctity of family life,[31] the vital role of the youth in nation-building[32] and the promotion of total human liberation
and development.[33] A reading of these provisions indeed clearly
shows that they are not judicially enforceable constitutional rights but merely
guidelines for legislation. The very
terms of the provisions manifest that they are only principles upon which
legislations must be based. Res ipsa
loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in itself and
which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the
provision does not require any legislation to put it in operation. It is per se judicially
enforceable. When our Constitution
mandates that [i]n the grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that - qualified Filipinos shall be
preferred. And when our Constitution
declares that a right exists in certain specified circumstances an action may
be maintained to enforce such right notwithstanding the absence of any
legislation on the subject; consequently, if there is no statute especially
enacted to enforce such constitutional right, such right enforces itself by its
own inherent potency and puissance, and from which all legislations must take
their bearings. Where there is a right
there is a remedy. Ubi jus ibi
remedium.
As regards our national patrimony, a member of the 1986
Constitutional Commission[34]
explains -
The patrimony of the
Nation that should be conserved and developed refers not only to our rich
natural resources but also to the cultural heritage of our race. 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.
We agree. In its plain
and ordinary meaning, the term patrimony pertains to heritage.[35] 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.
Manila Hotel has become a landmark - a living testimonial of
Philippine heritage. While it was
restrictively an American hotel when it first opened in 1912, it immediately
evolved to be truly Filipino. Formerly
a concourse for the elite, it has since then become the venue of various
significant events which have shaped Philippine history. It was called the Cultural Center of the
1930’s. It was the site of the
festivities during the inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of the
Philippine Government it plays host to dignitaries and official visitors
who are accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the book The
Manila Hotel: The Heart and Memory of a City.[37] During World War II the hotel was converted
by the Japanese Military Administration into a military headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese together with
Intramuros as the two (2) places for their final stand. Thereafter, in the 1950’s and 1960’s, the hotel became the center of political
activities, playing host to almost every political convention. In 1970 the hotel reopened after a
renovation and reaped numerous international recognitions, an acknowledgment of
the Filipino talent and ingenuity. In
1986 the hotel was the site of a failed coup d’ etat where an
aspirant for vice-president was “proclaimed” President of the Philippine
Republic.
For more than eight (8) decades 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. Verily,
Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes
within the purview of the constitutional shelter for it comprises the majority
and controlling stock, so that anyone who acquires or owns the 51% will have
actual control and management of the hotel.
In this instance, 51% of the MHC cannot be disassociated from the hotel
and the land on which the hotel edifice stands. Consequently, we cannot sustain respondents’ claim that the Filipino
First Policy provision is not applicable since what is being sold is only
51% of the outstanding shares of the corporation, not the Hotel building nor
the land upon which the building stands.[38]
The argument is pure sophistry.
The term qualified Filipinos as used in our Constitution also
includes corporations at least 60% of which is owned by Filipinos. This is very clear from the proceedings of
the 1986 Constitutional Commission -
THE PRESIDENT. Commissioner
Davide is recognized.
MR. DAVIDE. I would like to
introduce an amendment to the Nolledo amendment. And the amendment would consist in substituting the words
“QUALIFIED FILIPINOS” with the following: “CITIZENS OF THE PHILIPPINES OR
CORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED
BY SUCH CITIZENS.”
x x x x
MR. MONSOD. Madam
President, apparently the proponent is agreeable, but we have to raise a
question. Suppose it is a corporation
that is 80-percent Filipino, do we not give it preference?
MR. DAVIDE. The Nolledo
amendment would refer to an individual Filipino. What about a corporation wholly owned by Filipino citizens?
MR. MONSOD. At least 60
percent, Madam President.
MR. DAVIDE. Is that the
intention?
MR. MONSOD. Yes, because,
in fact, we would be limiting it if we say that the preference should only be
100-percent Filipino.
MR. DAVIDE. I want to get
that meaning clear because “QUALIFIED FILIPINOS” may refer only to individuals
and not to juridical personalities or entities.
MR. MONSOD. We agree, Madam
President.[39]
x x x x
MR. RODRIGO. Before we
vote, may I request that the amendment be read again.
MR. NOLLEDO. The amendment
will read: “IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE
STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS.” And the word “Filipinos” here, as intended by the proponents,
will include not only individual Filipinos but also Filipino-controlled
entities or entities fully-controlled by Filipinos.[40]
The phrase preference to qualified Filipinos was explained
thus -
MR. FOZ. Madam President, I
would like to request Commissioner Nolledo to please restate his amendment so
that I can ask a question.
MR. NOLLEDO. “IN THE GRANT
OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS.”
MR. FOZ. In connection with
that amendment, if a foreign enterprise is qualified and a Filipino enterprise
is also qualified, will the Filipino enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner
is more qualified in some aspects than the Filipino enterprise, will the
Filipino still be preferred?
MR. NOLLEDO. The answer is
“yes.”
MR. FOZ. Thank you.[41]
Expounding further on the Filipino First Policy provision
Commissioner Nolledo continues –
MR. NOLLEDO. Yes, Madam
President. Instead of “MUST,” it will be “SHALL - THE STATE SHALL GIVE
PREFERENCE TO QUALIFIED FILIPINOS.”
This embodies the so-called “Filipino First” policy. That means that Filipinos should be given
preference in the grant of concessions, privileges and rights covering the
national patrimony.[42]
The exchange of views in the sessions of the Constitutional
Commission regarding the subject provision was still further clarified by
Commissioner Nolledo[43]
-
Paragraph 2 of Section 10 explicitly mandates the “Pro-Filipino”
bias in all economic concerns. It is
better known as the FILIPINO FIRST Policy
x x x x This provision was never
found in previous Constitutions x x x x
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 counterproductive
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.”
Lastly, the word qualified is also determinable. Petitioner was so considered by respondent
GSIS and selected as one of the qualified bidders. It was pre-qualified by respondent GSIS in
accordance with its own guidelines so that the sole inference here is that
petitioner has been found to be possessed of proven management expertise in the
hotel industry, or it has significant equity ownership in another hotel
company, or it has an overall management and marketing proficiency to
successfully operate the Manila Hotel.[44]
The penchant to try to whittle away the mandate of the
Constitution by arguing that the subject provision is not self-executory and
requires implementing legislation is quite disturbing. The attempt to violate a clear
constitutional provision - by the government itself - is only too
distressing. To adopt such a line of
reasoning is to renounce the duty to ensure faithfulness to the Constitution. For, even some of the provisions of the
Constitution which evidently need implementing legislation have juridical life
of their own and can be the source of a judicial remedy. We cannot simply afford the government a
defense that arises out of the failure to enact further enabling, implementing
or guiding legislation. In fine, the
discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt -
The executive department has a constitutional duty to implement
laws, including the Constitution, even before Congress acts - provided that
there are discoverable legal standards for executive action. When the executive acts, it must be guided
by its own understanding of the constitutional command and of applicable
laws. The responsibility for reading
and understanding the Constitution and the laws is not the sole prerogative of
Congress. If it were, the executive
would have to ask Congress, or perhaps the Court, for an interpretation every
time the executive is confronted by a constitutional command. That is not how constitutional government
operates.[45]
Respondents further argue that the constitutional provision is
addressed to the State, not to respondent GSIS which by itself possesses a
separate and distinct personality. This
argument again is at best specious. It
is undisputed that the sale of 51% of the MHC could only be carried out with
the prior approval of the State acting through respondent Committee on
Privatization. As correctly pointed out
by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of
respondents GSIS and MHC a “state action.” In constitutional jurisprudence, the acts of persons distinct
from the government are considered “state action” covered by the
Constitution (1) when the activity it engages in is a “public function;”
(2) when the government is so significantly involved with the private actor as
to make the government responsible for his action; and, (3) when the government
has approved or authorized the action.
It is evident that the act of respondent GSIS in selling 51% of its
share in respondent MHC comes under the second and third categories of “state
action.” Without doubt therefore
the transaction, although entered into by respondent GSIS, is in fact a
transaction of the State and therefore subject to the constitutional command.[46]
When the Constitution addresses the State it refers not only to
the people but also to the government as elements of the State. After all, government is composed of three
(3) divisions of power - legislative, executive and judicial. Accordingly, a constitutional mandate
directed to the State is correspondingly directed to the three (3) branches of
government. It is undeniable that in
this case the subject constitutional injunction is addressed among others to
the Executive Department and respondent GSIS, a government instrumentality
deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the
higher bid it is not yet the winning bidder.
The bidding rules expressly provide that the highest bidder shall only
be declared the winning bidder after it has negotiated and executed the
necessary contracts, and secured the requisite approvals. Since the Filipino First Policy
provision of the Constitution bestows preference on qualified Filipinos the mere tending of the
highest bid is not an assurance that the highest bidder will be declared the
winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are they under obligation
to enter into one with the highest bidder.
For in choosing the awardee respondents are mandated to abide by the
dictates of the 1987 Constitution the provisions of which are presumed to be
known to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject
constitutional provision is, as it should be, impliedly written in the bidding
rules issued by respondent GSIS, lest the bidding rules be nullified for being
violative of the Constitution. It is a
basic principle in constitutional law that all laws and contracts must conform
with the fundamental law of the land.
Those which violate the Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f
for any reason the Highest Bidder
cannot be awarded the Block of Shares, GSIS may offer this to other Qualified
Bidders that have validly submitted bids provided that these Qualified Bidders
are willing to match the highest bid in terms of price per share.[47] Certainly, the constitutional mandate itself
is reason enough not to award the block of shares immediately to the
foreign bidder notwithstanding its submission of a higher, or even the highest,
bid. In fact, we cannot conceive of a stronger
reason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest bid
in a public bidding concerning the grant of rights, privileges and concessions
covering the national economy and patrimony, thereby exceeding the bid of a Filipino,
there is no question that the Filipino will have to be allowed to match the bid
of the foreign entity. And if the
Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and
meaning to the Filipino First Policy provision of the 1987
Constitution. For, while this may
neither be expressly stated nor contemplated in the bidding rules, the
constitutional fiat is omnipresent to be simply disregarded. To ignore it would be to sanction a perilous
skirting of the basic law.
This Court does not discount the apprehension that this policy
may discourage foreign investors. But
the Constitution and laws of the Philippines are understood to be always open
to public scrutiny. These are given
factors which investors must consider when venturing into business in a foreign
jurisdiction. Any person therefore
desiring to do business in the Philippines or with any of its agencies or
instrumentalities is presumed to know his rights and obligations under the
Constitution and the laws of the forum.
The argument of respondents that petitioner is now estopped from
questioning the sale to Renong Berhad since petitioner was well aware from the
beginning that a foreigner could participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike
were invited to the bidding. But
foreigners may be awarded the sale only if no Filipino qualifies, or if the
qualified Filipino fails to match the highest bid tendered by the foreign
entity. In the case before us, while
petitioner was already preferred at the inception of the bidding because of the
constitutional mandate, petitioner had not yet matched the bid offered by
Renong Berhad. Thus it did not have the
right or personality then to compel respondent GSIS to accept its earlier
bid. Rightly, only after it had matched
the bid of the foreign firm and the apparent disregard by respondent GSIS of
petitioner’s matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional
safeguard unless perhaps the award has been finally made. To insist on selling the Manila Hotel to
foreigners when there is a Filipino group willing to match the bid of the
foreign group is to insist that government be treated as any other ordinary
market player, and bound by its mistakes or gross errors of judgment,
regardless of the consequences to the Filipino people. The miscomprehension of the Constitution is
regrettable. Thus we would rather
remedy the indiscretion while there is still an opportunity to do so than let
the government develop the habit of forgetting that the Constitution lays down
the basic conditions and parameters for its actions.
Since petitioner has already matched the bid price tendered by
Renong Berhad pursuant to the bidding rules, respondent GSIS is left with no
alternative but to award to petitioner the block of shares of MHC and to
execute the necessary agreements and documents to effect the sale in accordance
not only with the bidding guidelines and procedures but with the Constitution
as well. The refusal of respondent GSIS
to execute the corresponding documents with petitioner as provided in the
bidding rules after the latter has matched the bid of the Malaysian firm
clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine
nationalism. It is embodied in the 1987
Constitution not merely to be used as a guideline for future legislation but
primarily to be enforced; so must it be enforced. This Court as the ultimate guardian of the Constitution will
never shun, under any reasonable circumstance, the duty of upholding the
majesty of the Constitution which it is tasked to defend. It is worth emphasizing that it is not the
intention of this Court to impede and diminish, much less undermine, the influx
of foreign investments. Far from it,
the Court encourages and welcomes more business opportunities but avowedly
sanctions the preference for Filipinos whenever such preference is ordained by
the Constitution. The position of the
Court on this matter could have not been more appropriately articulated by
Chief Justice Narvasa -
As scrupulously as it has tried to observe that it is not its
function to substitute its judgment for that of the legislature or the
executive about the wisdom and feasibility of legislation economic in nature,
the Supreme Court has not been spared criticism for decisions perceived as
obstacles to economic progress and development x x x x in connection with a
temporary injunction issued by the Court’s First Division against the sale of
the Manila Hotel to a Malaysian Firm and its partner, certain statements were
published in a major daily to the effect that that injunction “again
demonstrates that the Philippine legal system can be a major obstacle to doing
business here.”
Let it be stated for the record once again that while it is no
business of the Court to intervene in contracts of the kind referred to or set
itself up as the judge of whether they are viable or attainable, it is its
bounden duty to make sure that they do not violate the Constitution or the
laws, or are not adopted or implemented with grave abuse of discretion
amounting to lack or excess of jurisdiction.
It will never shirk that duty, no matter how buffeted by winds of unfair
and ill-informed criticism.[48]
Privatization of a business asset for purposes of enhancing its
business viability and preventing further losses, regardless of the character
of the asset, should not take precedence over non-material values. A commercial, nay even a budgetary,
objective should not be pursued at the expense of national pride and
dignity. For the Constitution enshrines
higher and nobler non-material values.
Indeed, the Court will always defer to the Constitution in the proper
governance of a free society; after all, there is nothing so sacrosanct
in any economic policy as to draw itself beyond judicial review when the
Constitution is involved.[49]
Nationalism is inherent in the very concept of the Philippines
being a democratic and republican state, with sovereignty residing in the
Filipino people and from whom all government authority emanates. In nationalism, the happiness and welfare of
the people must be the goal. The
nation-state can have no higher purpose.
Any interpretation of any constitutional provision must adhere to such
basic concept. Protection of foreign
investments, while laudible, is merely a policy. It cannot override the demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is not just
any commodity to be sold to the highest bidder solely for the sake of
privatization. We are not talking about
an ordinary piece of property in a commercial district. We are talking about a historic relic that
has hosted many of the most important events in the short history of the
Philippines as a nation. We are talking
about a hotel where heads of states would prefer to be housed as a strong
manifestation of their desire to cloak the dignity of the highest state
function to their official visits to the Philippines. Thus the Manila Hotel has played and continues to play a
significant role as an authentic repository of twentieth century Philippine
history and culture. In this sense, it
has become truly a reflection of the Filipino soul - a place with a history
of grandeur; a most historical setting that has played a part in the
shaping of a country.[51]
This Court cannot extract rhyme nor reason from the determined
efforts of respondents to sell the historical landmark - this Grand Old Dame
of hotels in Asia - to a total stranger.
For, indeed, the conveyance of this epic exponent of the Filipino psyche
to alien hands cannot be less than mephistophelian for it is, in whatever
manner viewed, a veritable alienation of a nation’s soul for some pieces of
foreign silver. And so we ask: What
advantage, which cannot be equally drawn from a qualified Filipino, can be
gained by the Filipinos if Manila Hotel - and all that it stands for - is sold
to a non-Filipino? How much of national
pride will vanish if the nation’s cultural heritage is entrusted to a foreign
entity? On the other hand, how much
dignity will be preserved and realized if the national patrimony is safekept in
the hands of a qualified, zealous and well-meaning Filipino? This is the plain and simple meaning of the Filipino
First Policy provision of the Philippine Constitution. And this Court, heeding the clarion call of
the Constitution and accepting the duty of being the elderly watchman of the
nation, will continue to respect and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE
SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling 51%
of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT
the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the
subject 51% of the shares of the Manila Hotel Corporation at P44.00 per
share and thereafter to execute the necessary agreements and documents to
effect the sale, to issue the necessary clearances and to do such other acts
and deeds as may be necessary for the purpose.
SO ORDERED.
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ, concur.
Narvasa, C.J., (Chairman),
and Melo, J., joins J. Puno in his
dissent.
Padilla, J., see concurring opinion.
Mendoza, J., see concurring opinion
Torres, J., with separate opinion
Puno, J., see dissent.
Panganiban J., with separate dissenting opinion.