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MANILA PRINCE HOTEL VS.

GOVERNMENT SERVICE INSURANCE SYSTEM


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

Bellosillo, J.

FACTS:

The Government Service Insurance System (GSIS), pursuant to the privatization program of the Philippine
Government under Proclamation 50 dated 8 December 1986, decided to sell through public bidding 30%
to 51% of the issued and outstanding shares of the Manila Hotel (MHC). In a close bidding held on 18
September 1995 only two bidders participated: 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 Berhard as the
winning bidder/strategic partner and the execution of the necessary contracts, the Manila Prince Hotel
matched the bid price of P44.00 per share tendered by Renong Berhad in a letter to GSIS dated 28
September 1995. Manila Prince Hotel sent a manager’s check to the GSIS in a subsequent letter, but which
GSIS refused to accept. On 17 October 1995, perhaps apprehensive that GSIS has disregarded the tender
of the matching bid and that the sale of 51% of the MHC may be hastened by GSIS and consummated
with Renong Berhad, Manila Prince Hotel came to the Court on prohibition and mandamus.

ISSUE:

Whether or not sec 10, par 2 Art XII of the 1987 Constitution is self-executing; and whether or not the
petitioner as a Filipino controlled corporation is also covered by the term “qualified Filipinos” of the
Constitution.

HELD:

The Supreme Court directed the GSIS and other respondents to cease and desist from selling the51%
shares of the MHC to the Malaysian firm Renong Berhad, and instead to accept the matching bid of the
petitioner Manila Prince Hotel. According to Justice Bellosillo, ponente of the case at bar, Section 10,
second paragraph, Article11 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. The Manila Hotel had long been a landmark, therefore, making the 51% of the equity of said hotel
to fall within the purview of the constitutional shelter for it emprises the majority and controlling stock. The
Court also reiterated how much of national pride will vanish if the nation’s cultural heritage will fall on the
hands of foreigners.

The court ruled that Art II of the Constitution is generally not self-executing. However, if a provision 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. In case of doubt, the Constitution should be considered self-executing. Sec 10 par 2 Art XII of
the 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. According to the 1986 Constitutional
Commission proceedings, the term ‘qualified Filipino’ also includes corporations at least 60% of which is
owned by Filipinos. The court further highlighted the exchange of views during the sessions of
the Constitutional Commission when framers explicitly provided that a qualified Filipino enterprise shall
be given preference over a foreigner even if such foreigner is more qualified in some aspects.

In the granting of economic rights, privileges, and concessions, when a choice has to be made between a
"qualified foreigner" ends a "qualified Filipino," the latter shall be chosen over the former." Lastly, the
wordqual i fi e d 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 Court instructed GSIS to accept the bid offered by Manila
Prince Hotel to purchase The Manila Hotel Corporation at 44PHP per share and to execute the necessary
clearances and acts as may be necessary for the purpose of the sale.