Case#3

Ti
tl
e:MANILAPRI
NCEHOTEL, peti
ti
oner,v
s.GOVERNMENTSERVI
CEI
NSURANCESYSTEM,
MANI
LA
HOTELCORPORATI
ON,COMMI TTEEONPRI VATI
ZATI
ONandOFFI
CEOFTHEGOVERNMENT
CORPORATECOUNSEL,
respondents.267SCRA408

GRno.[
G.R.No.122156.Febr
uar
y3,
1997]

Ponent
e:BELLOSI
LLO,
J.

Fact
s:

Pursuanttothepri
vati
zat
ionprogr
am ofthePhil
ippineGov ernment ,t
heGSI Ssoldinpubli
caucti
onits
stakeinManilaHotelCor
porat
ion(MHC).Only2bidder sparti
cipated:peti
ti
onerMani l
aPrinceHotel
Corporati
on,aFi
li
pinocorpor
ati
on,whi
chof f
eredtobuy51%oft heMHCor15, 300,000sharesatP41.58
pershare,andRenongBerhad,aMalaysi
anfirm,withITT-Sheratonasi t
shot el
oper at
or,
whichbidforthe
samenumberofshar esatP44.00pershare,orP2.42mor ethant hebi dofpeti
tioner.

Peti
ti
onerfi
ledapeti
ti
onbeforetheSupremeCour tt
ocompel t
heGSISt oall
owi tt
omat chthebidof
RenongBerhad.I
tinv
okedtheFili
pinoFi
rstPol
icyenshri
nedin§10,paragr
aph2, Art
icl
eXIIofthe1987
Consti
tut
ion,whi
chprovi
desthat“i
nthegrantofri
ghts,pr
ivi
l
eges,andconcessionscoveri
ngthenati
onal
economyandpatrimony,
theStateshall
givepref
erencetoqual
if
iedFil
i
pinos.”

I
ssues:

1.Whet hersec.
10,par
agraph2,Art
icl
eXIIofthe1987Consti
tut
ioni
sasel
f-
execut
ingpr
ovi
sionand
doesnotneedimplementi
nglegi
slat
iontocarr
yitint
oeff
ect;

2. Assumingsec.
10,par
agr
aph2, Ar
ti
cl
eXIIi
ssel
f-
execut
ing,whet
hert
hecont
rol
l
ingshar
esoft
he
Mani
laHotelCor
porat
ionf
orm par
tofourpat
ri
monyasanat i
on;

3. Whet
herGSI
Sisincl
udedint
het
erm“
Stat
e,”hence,
mandat
edt
oimpl
ementsec.
10,
par
agr
aph2,
Ar
ti
cleXI
Ioft
heConsti
tut
ion;
and

4.Assumi ngGSISispartoftheStat
e, whetheri
tshoul
dgivepr
efer
encetothepeti
ti
oner
,aFi
li
pino
cor
porat
ion,overRenongBerhad,aforeigncorpor
ati
on,i
nthesal
eofthecontr
oll
ingshar
esoft
heMani
l
a
Hotel
Corporat
ion.

Resol
uti
on/
Rul
i
ng:

[
TheCour
t,v
oti
ng11-
4,DI
SMI
SSEDt
hepet
it
ion.
]

1. YES,sec.
10,
paragr
aph2,Art
icl
eXIIofthe1987Const
it
uti
oni
sasel
f-
execut
ingpr
ovi
sionanddoes
notneedi
mplement
ingl
egi
slat
iontocarr
yitint
oeff
ect.

Sec.10,secondpar.
,ofArtXIIiscouchedinsuchawayasnott omakei tappearthatitisnon-
sel f
-
executi
ngbutsimplyforpurposesofstyl
e.But ,cer
tainly
,thelegisl
atur
ei snotprecludedfrom enacting
fur
therlawstoenfor
cet heconsti
tuti
onalprov
isionsol ongast hecontemplatedstat ut
esquareswi ththe
Consti
tuti
on.Minordetail
smaybel ef
ttothelegisl
aturewithoutimpairi
ngt heself
-executi
ngnat ureof
const
it
uti
onal
prov
isi
ons.

xxx xxx xxx

Respondent s...ar guet hatthenon-sel f-executi

ngnat ureofSec.10, secondpar .,ofArt.XIIisimplied
fr
om thet enoroft hef i
rstandt hi
rdpar agraphsoft hesamesect i
onwhi chundoubt edl
yar enotsel f
-
executi
ng.Thear gumenti sfl
awed.I ft hef i
rstandt hi
rdpar agraphsar enotsel f-execut i
ngbecause
Congressi ssti
lltoenactmeasur est oencour aget heformat i
onandoper ati
onofent erpri
sesf ull
yowned
byFili
pinos,asint hef i
rstparagraph, andt heSt atesti
llneedsl egisl
ationt oregulat eandexer cise
authori
tyov erf
or ei
gni nv est
ment swi thinitsnationaljur
isdicti
on, asi
nt het hir
dpar agraph,thenaf ort
ior
i,
bythesamel ogic,thesecondpar agraphcanonl ybesel f
-execut i
ngasi tdoesnotbyi tslanguager equir
e
anylegisl
ationinor dertogi vepreferencet oqualif
iedFili
pinosi nthegr antofr i
ght s,pri
vil
egesand
concessionscov eringthenat ionaleconomyandpat ri
mony .Aconst itutionalprovisionmaybesel f
-
executi
ngi nonepar tandnon- self
-execut i
nginanot her.

xxx.Sec.10, secondpar .,Art

.XIIofthe1987Const it
uti
oni samandat or y,posi ti
vecommandwhi chi s
compl eteinitselfandwhi chneedsnof urtherguideli
nesori mpl ementingl awsorr ulesforits
enforcement .Fr om itsver ywordsthepr ov i
si
ondoesnotr equireanylegi slationtoputi tinoper ation.It
i
spersej udicial
lyenforceable.WhenourConst i
tut
ionmandat esthat[i]nthegr antofrights,privi
leges,
andconcessi onscov eri
ngnat ionaleconomyandpat r
imony ,t
heSt ateshal l givepreferencet oqual if
ied
Fil
ipi
nos, i
tmeansj ustthat-qual i
fi
edFi l
ipinosshallbepr efer
red.AndwhenourConst it
ut i
ondecl ares
thatar i
ghtexi st
si ncertainspecifi
edcircumst ancesanact i
onmaybemai nt ainedtoenf orcesuchr ight
notwithstandingt heabsenceofanyl egislati
onont hesubj ect;consequent ly,ifthereisnost atute
especiall
yenact edt oenf orcesuchconst ituti
onalri
ght,suchr i
ghtenfor cesi tselfbyitsowni nherent
potencyandpui ssance, andf r
om whi chall l
egisl
ati
onsmustt aketheirbear i
ngs.Wher et hereisar i
ght
thereisar emedy .Ubi j
usi bir
emedi um.

2. YES,
thecont
rol
l
ingshar
esoft
heMani
l
aHot
elCor
por
ati
onf
orm par
tofourpat
ri
monyasanat
ion.

Ini
tsplai
nandordi
nar
ymeani ng,
theterm patri
monyper tai
nst
oher i
tage.Whent heConsti
tut
ionspeaks
ofnat
ionalpat
ri
mony,
itr
efersnotonlytothenaturalresour
cesofthePhi l
i
ppines,ast
heConst it
ution
coul
dhav ever
ywel
lusedtheterm nat
uralresources,
butalsotot
hecul tur
alheri
tageoftheFil
ipinos.

xxx xxx xxx

Formor et haneight(8)decadesMani l
aHot elhasbor emut ewi t
nesstot hetri
umphsandf ai
lures,l
oves
andf rustrationsoftheFili
pinos;it
sexist enceisi mpressedwi thpubli
cinterest
;it
sownhi storici
ty
associ atedwi thourstruggl
ef orsovereignty, i
ndependenceandnat i
onhood.Ver il
y,ManilaHot elhas
becomepar tofournat i
onal economyandpat rimony.Forsur e,51%oft heequityoftheMHCcomes
withint hepur vi
ewoft heconst i
tuti
onal shelterforitcomprisesthemaj orit
yandcontroll
ingst ock,sothat
anyonewhoacqui resorownst he51%wi l
lhav eactualcontrolandmanagementoft hehot el.Inthis
i
nst ance, 51%oft heMHCcannotbedi sassoci atedfrom t
hehot elandthel andonwhi chthehot eledif
ice
stands.Consequent
ly,
wecannotsustai
nr espondent
s’clai
mt hatt
heFi
li
pinoFi
rstPol
i
cyprovisi
onisnot
appli
cabl
esincewhatisbei
ngsol
di sonl
y51%oft heoutstandi
ngshar
esofthecorpor
ati
on,nottheHotel
buil
dingnort
helanduponwhichthebuil
dingstands.

3. YES,
GSISisi
ncludedinthet
erm“
Stat
e,”hence,
iti
smandat
edt
oimpl
ementsec.
10,
par
agr
aph2,
Ar
ti
cleXI
IoftheConsti
tut
ion.

Iti
sundi sputedt hatt
hesal eof51%oft heMHCcoul donl ybecar r
iedoutwi t
ht hepr i
orappr oval oft
he
Stateact i
ngthroughr espondentCommi tteeonPr ivati
zat i
on.[T]hi
sf actalonemakest hesal eoft he
assetsofr espondentsGSI SandMHCa“ stateact ion.”Inconst i
tuti
onal j
urisprudence, theact sof
personsdi st
inctf r
om thegov ernmentar econsi dered“ stateacti
on”cov eredbyt heConst i
tut
ion( 1)when
theact i
vit
yitengagesi ni sa“publi
cf unct i
on;”(2)whent hegovernmenti ssosi gnifi
cantlyinvolvedwith
thepr i
vateactorast omaket hegov ernmentr esponsi bleforhisact i
on;and, (3)whent hegov ernmenthas
approv edoraut hori
zedt heacti
on.I tisev identt hattheactofr espondentGSI Sinselli
ng51%ofi tsshar
e
i
nr espondentMHCcomesundert hesecondandt hi
rdcat egori
esof“ stat
eact ion.”Withoutdoubt
thereforethetransaction,alt
houghent eredintobyr espondentGSI S, i
sinfactat ransactionoft heState
andt herefor
esubj ecttot heconsti
tutional command.

Whent heConstit
utionaddressest heStateitrefersnotonlytothepeoplebutalsot
othegov ernmentas
el
ement softheState.Afterall
,gov er
nmenti scomposedoft hree(3)di
visi
onsofpower-l egislat
ive,
executi
veandjudici
al.Accordingly,aconstituti
onal mandatedir
ectedtotheStatei
scorrespondi ngly
dir
ectedtothethree(3)branchesofgov er
nment .Iti
sundeniablethati
nthi
scasethesubj ect
consti
tut
ionali
njuncti
onisaddr essedamongot her stotheExecuti
veDepartmentandrespondentGSI S,
a
governmentinst
rument al
i
tyderivingit
saut horit
yf r
om theState.

4. YES,
GSISshoul
dgi
vepr
efer
encet
othepet
it
ioneri
nthesal
eoft
hecont
rol
l
ingshar
esoft
heMani
l
a
Hot
elCorpor
ati
on.

I
tshoul dbest ressedthatwhil
etheMal aysianfir
m offeredt hehigherbiditisnotyetthewi nningbi dder.
Thebi ddi ngr ul
esexpr essl
yprovidethatt
hehi ghestbiddershal lonlybedeclaredthewi nningbi dderaf t
er
i
thasnegot iatedandexecut edthenecessar ycontr
act s,andsecur edtherequisi
teappr ovals.Si ncet he
Fil
ipinoFi rstPol i
cyprovisi
onoftheConst i
tutionbestowspr efer
enceonqual if
iedFil
ipi
nost hemer e
tendingoft hehi ghestbidi
snotanassur ancet hatthehighestbi dderwillbedeclar
edt hewi nningbi dder.
Resul tantly,r
espondent sarenotboundt omaket heawar dyet,noraretheyunderobl i
gationtoent eri nt
o
onewi ththehi ghestbidder.Forinchoosingt heawar deer espondentsaremandat edt oabi debyt he
dictatesoft he1987Const itut
iontheprovisi
onsofwhi char epresumedt obeknownt oall t
hebi dder sand
otheri nterestedpar t
ies.

xxx xxx xxx

Par
agraphV.J.1ofthebi
ddi
ngrul
espr
ovi
desthat[
i]
fforanyr
easontheHighestBi
ddercannotbe
awar
dedtheBlockofShar
es,GSI
Smayoff
erthi
stootherQual
if
iedBi
dder
sthathaveval
idl
ysubmitt
ed
bidspr ovi
dedthatt
heseQual i
fi
edBiddersarewill
i
ngtomat cht hehighestbi
di ntermsofpri
cepershar
e.
Certainly,
theconst
it
utionalmandat
eitselfi
sreasonenoughnott oawardthebl ockofshar
es
i
mmedi at
elyt
otheforeignbi
ddernotwit
hstandi
ngitssubmissionofahi gher
, oreventhehi
ghest
,bid.I
n
fact
, wecannotconceiveofast r
ongerreasonthantheconsti
tutionali
njunct
ioni t
sel
f.

I
nt hei nstantcase,wher eaf orei
gnf i
rm submi tsthehighestbi dinapubl
icbiddi
ngconcer ningthegr ant
ofright s,pr
ivi
legesandconcessi onscov eri
ngthenat i
onal economyandpat ri
mony ,t
herebyexceedi ng
thebi dofaFi li
pino,thereisnoquest ionthattheFi l
ipi
nowi llhavetobeall
owedt omat chthebi dofthe
for
ei gnent i
ty.Andi ftheFili
pinomat chest hebidofaf oreignf i
rmtheawardshoul dgotot heFilipi
no.It
mustbesoi fwear et ogiveli
feandmeani ngt otheFili
pinoFi r
stPoli
cyprovi
sionofthe1987Const ituti
on.
For,whi l
ethi
smaynei therbeexpr esslystatednorcont emplatedinthebi
ddingrules,t
heconst ituti
onal
fi
atisomni presenttobesi mpl ydisr
egarded.Toi gnoreitwoul dbetosancti
onaper i
lousski r
ti
ngoft he
basicl aw.