Manila Prince Hotel vs GSIS

[G.R. No. 122156. February 3, 1997]

Petitioner: MANILA PRINCE HOTEL
Respondent: GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE
ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL

Facts:
Manila Hotel Corporation (MHC) is owned by GSIS.
GSIS , pursuant to the privatization program under PD 50 decided to sell through public bidding
30% to 51% of the issued and outstanding shares of Manila Hotel Corporation (MHC)
In a close bidding, only 2 bidders participated:
Manila Prince Hotel, 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 atP44.00 per share, or P2.42 more than the
bid of Manila Prince Hotel.
Renong Berhard was the highest bidder.
Manila Prince Hotel came to the Supreme Court to stop GSIS from selling MHCs share to
Renong Berhard.

Argument of Manila Prince Hotel: 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, is invoked by Manila Prince Hotel.
It insisted that they should be preferred over Renong Berhard.

Argument of GSIS: 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.
Respondents insisted that Renong Berhard should acquire 51% of the shares of MHC since it was
the highest bidder

Issue: Whether or not Manila Prince Hotel shall be preferred

Ruling of the Supreme Court:
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
onqualified 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.
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.