G.R. No.

166471               March 22, 2011

TAWANG MULTI-PURPOSE COOPERATIVE Petitioner,

vs.
LA TRINIDAD WATER DISTRICT, Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court.
The petition1 challenges the 1 October 2004 Judgment2 and 6 November
2004 Order3 of the Regional Trial Court (RTC), Judicial Region 1, Branch 62,
La Trinidad, Benguet, in Civil Case No. 03-CV-1878.

The Facts

Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with

the Cooperative Development Authority, and organized to provide domestic
water services in Barangay Tawang, La Trinidad, Benguet.

La Trinidad Water District (LTWD) is a local water utility created under

Presidential Decree (PD) No. 198, as amended. It is authorized to supply
water for domestic, industrial and commercial purposes within the municipality
of La Trinidad, Benguet.

On 9 October 2000, TMPC filed with the National Water Resources Board
(NWRB) an application for a certificate of public convenience (CPC) to
operate and maintain a waterworks system in Barangay Tawang. LTWD
opposed TMPC’s application. LTWD claimed that, under Section 47 of PD No.
198, as amended, its franchise is exclusive. Section 47 states that:

Sec. 47. Exclusive Franchise. No franchise shall be granted to any other

person or agency for domestic, industrial or commercial water service within
the district or any portion thereof unless and except to the extent that the
board of directors of said district consents thereto by resolution duly adopted,
such resolution, however, shall be subject to review by the Administration.

In its Resolution No. 04-0702 dated 23 July 2002, the NWRB approved
TMPC’s application for a CPC. In its 15 August 2002 Decision,4 the NWRB
held that LTWD’s franchise cannot be exclusive since exclusive franchises
are unconstitutional and found that TMPC is legally and financially qualified to
operate and maintain a waterworks system. NWRB stated that:

With respect to LTWD’s opposition, this Board observes that:

1. It is a substantial reproduction of its opposition to the application for water

permits previously filed by this same CPC applicant, under WUC No. 98-17
and 98-62 which was decided upon by this Board on April 27, 2000. The
issues being raised by Oppositor had been already resolved when this Board
said in pertinent portions of its decision:

"The authority granted to LTWD by virtue of P.D. 198 is not Exclusive. While
Barangay Tawang is within their territorial jurisdiction, this does not mean that
all others are excluded in engaging in such service, especially, if the district is
not capable of supplying water within the area. This Board has time and again
ruled that the "Exclusive Franchise" provision under P.D. 198 has misled most
water districts to believe that it likewise extends to be [sic] the waters within
their territorial boundaries. Such ideological adherence collides head on with
the constitutional provision that "ALL WATERS AND NATURAL
RESOURCES BELONG TO THE STATE". (Sec. 2, Art. XII) and that "No
franchise, certificate or authorization for the operation of public [sic] shall be
exclusive in character".

xxxx

All the foregoing premises all considered, and finding that Applicant is legally
and financially qualified to operate and maintain a waterworks system; that
the said operation shall redound to the benefit of the homeowners/residents of
the subdivision, thereby, promoting public service in a proper and suitable
manner, the instant application for a Certificate of Public Convenience is,
hereby, GRANTED.5

LTWD filed a motion for reconsideration. In its 18 November 2002

Resolution,6 the NWRB denied the motion.

LTWD appealed to the RTC.

The RTC’s Ruling

In its 1 October 2004 Judgment, the RTC set aside the NWRB’s 23 July 2002
Resolution and 15 August 2002 Decision and cancelled TMPC’s CPC. The
RTC held that Section 47 is valid. The RTC stated that:

The Constitution uses the term "exclusive in character". To give effect to this
provision, a reasonable, practical and logical interpretation should be adopted
without disregard to the ultimate purpose of the Constitution. What is this
ultimate purpose? It is for the state, through its authorized agencies or
instrumentalities, to be able to keep and maintain ultimate control and
supervision over the operation of public utilities. Essential part of this control
and supervision is the authority to grant a franchise for the operation of a
public utility to any person or entity, and to amend or repeal an existing
franchise to serve the requirements of public interest. Thus, what is repugnant
to the Constitution is a grant of franchise "exclusive in character" so as to
preclude the State itself from granting a franchise to any other person or entity
than the present grantee when public interest so requires. In other words, no
franchise of whatever nature can preclude the State, through its duly
authorized agencies or instrumentalities, from granting franchise to any
person or entity, or to repeal or amend a franchise already granted.
Consequently, the Constitution does not necessarily prohibit a franchise that
is exclusive on its face, meaning, that the grantee shall be allowed to exercise
this present right or privilege to the exclusion of all others. Nonetheless, the
grantee cannot set up its exclusive franchise against the ultimate authority of
the State.7

TMPC filed a motion for reconsideration. In its 6 November 2004 Order, the
RTC denied the motion. Hence, the present petition.

Issue

TMPC raises as issue that the RTC erred in holding that Section 47 of PD No.
198, as amended, is valid.

The Court’s Ruling

The petition is meritorious.

What cannot be legally done directly cannot be done indirectly. This rule is
basic and, to a reasonable mind, does not need explanation. Indeed, if acts
that cannot be legally done directly can be done indirectly, then all laws would
be illusory.

In Alvarez v. PICOP Resources, Inc.,8 the Court held that, "What one cannot
do directly, he cannot do indirectly."9 In Akbayan Citizens Action Party v.
Aquino,10 quoting Agan, Jr. v. Philippine International Air Terminals Co.,
Inc.,11 the Court held that, "This Court has long and consistently adhered to
the legal maxim that those that cannot be done directly cannot be done
indirectly."12 In Central Bank Employees Association, Inc. v. Bangko Sentral
ng Pilipinas,13 the Court held that, "No one is allowed to do indirectly what he
is prohibited to do directly."14

The President, Congress and the Court cannot create directly franchises for
the operation of a public utility that are exclusive in character. The 1935, 1973
and 1987 Constitutions expressly and clearly prohibit the creation of
franchises that are exclusive in character. Section 8, Article XIII of the 1935
Constitution states that:

No franchise, certificate, or any other form of authorization for the operation of

a public utility shall be granted except to citizens of the Philippines or to
corporations or other entities organized under the laws of the Philippines, sixty
per centum of the capital of which is owned by citizens of the Philippines, nor
shall such franchise, certificate or authorization be exclusive in
character or for a longer period than fifty years. (Empahsis supplied)

Section 5, Article XIV of the 1973 Constitution states that:

No franchise, certificate, or any other form of authorization for the operation of

a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at
least sixty per centum of the capital of which is owned by such citizens, nor
shall such franchise, certificate or authorization be exclusive in
character or for a longer period than fifty years. (Emphasis supplied)

Section 11, Article XII of the 1987 Constitution states that:

No franchise, certificate, or any other form of authorization for the operation of

a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at
least sixty per centum of whose capital is owned by such citizens, nor shall
such franchise, certificate or authorization be exclusive in character or for
a longer period than fifty years. (Emphasis supplied)

Plain words do not require explanation. The 1935, 1973 and 1987
Constitutions are clear — franchises for the operation of a public utility cannot
be exclusive in character. The 1935, 1973 and 1987 Constitutions expressly
and clearly state that, "nor shall such franchise x x x be exclusive in
character." There is no exception.

When the law is clear, there is nothing for the courts to do but to apply it. The
duty of the Court is to apply the law the way it is worded. In Security Bank and
Trust Company v. Regional Trial Court of Makati, Branch 61,15 the Court held
that:

Basic is the rule of statutory construction that when the law is clear and
unambiguous, the court is left with no alternative but to apply the same
according to its clear language. As we have held in the case of Quijano v.
Development Bank of the Philippines:

"x x x We cannot see any room for interpretation or construction in the clear
and unambiguous language of the above-quoted provision of law. This Court
had steadfastly adhered to the doctrine that its first and fundamental
duty is the application of the law according to its express terms,
interpretation being called for only when such literal application is impossible.
No process of interpretation or construction need be resorted to where a
provision of law peremptorily calls for application. Where a requirement or
condition is made in explicit and unambiguous terms, no discretion is
left to the judiciary. It must see to it that its mandate is
obeyed."16 (Emphasis supplied)

In Republic of the Philippines v. Express Telecommunications Co., Inc.,17 the

Court held that, "The Constitution is quite emphatic that the operation of a
public utility shall not be exclusive."18 In Pilipino Telephone Corporation v.
National Telecommunications Commission,19 the Court held that, "Neither
Congress nor the NTC can grant an exclusive ‘franchise, certificate, or any
other form of authorization’ to operate a public utility." 20 In National Power
Corp. v. Court of Appeals,21 the Court held that, "Exclusivity of any public
franchise has not been favored by this Court such that in most, if not all,
grants by the government to private corporations, the interpretation of rights,
privileges or franchises is taken against the grantee."22 In Radio
Communications of the Philippines, Inc. v. National Telecommunications
Commission,23 the Court held that, "The Constitution mandates that a
franchise cannot be exclusive in nature."24

Indeed, the President, Congress and the Court cannot create directly
franchises that are exclusive in character. What the President, Congress and
the Court cannot legally do directly they cannot do indirectly. Thus, the
President, Congress and the Court cannot create indirectly franchises that are
exclusive in character by allowing the Board of Directors (BOD) of a water
district and the Local Water Utilities Administration (LWUA) to create
franchises that are exclusive in character.

In PD No. 198, as amended, former President Ferdinand E. Marcos

(President Marcos) created indirectly franchises that are exclusive in
character by allowing the BOD of LTWD and the LWUA to create directly
franchises that are exclusive in character. Section 47 of PD No. 198, as
amended, allows the BOD and the LWUA to create directly franchises that are
exclusive in character. Section 47 states:

Sec. 47. Exclusive Franchise. No franchise shall be granted to any other

person or agency for domestic, industrial or commercial water service within
the district or any portion thereof unless and except to the extent that the
board of directors of said district consents thereto by resolution duly
adopted, such resolution, however, shall be subject to review by the
Administration. (Emphasis supplied)

In case of conflict between the Constitution and a statute, the Constitution

always prevails because the Constitution is the basic law to which all other
laws must conform to. The duty of the Court is to uphold the Constitution and
to declare void all laws that do not conform to it.

In Social Justice Society v. Dangerous Drugs Board,25 the Court held that, "It
is basic that if a law or an administrative rule violates any norm of the
Constitution, that issuance is null and void and has no effect. The Constitution
is the basic law to which all laws must conform; no act shall be valid if it
conflicts with the Constitution."26 In Sabio v. Gordon,27 the Court held that, "the
Constitution is the highest law of the land. It is the ‘basic and paramount law
to which all other laws must conform.’"28 In Atty. Macalintal v. Commission on
Elections,29 the Court held that, "The Constitution is the fundamental and
paramount law of the nation to which all other laws must conform and in
accordance with which all private rights must be determined and all public
authority administered. Laws that do not conform to the Constitution shall be
stricken down for being unconstitutional."30 In Manila Prince Hotel v.
Government Service Insurance System,31 the Court held that:

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."32 (Emphasis supplied)

To reiterate, the 1935, 1973 and 1987 Constitutions expressly prohibit the
creation of franchises that are exclusive in character. They uniformly
command that "nor shall such franchise x x x be exclusive in character."
This constitutional prohibition is absolute and accepts no exception. On the
other hand, PD No. 198, as amended, allows the BOD of LTWD and LWUA to
create franchises that are exclusive in character. Section 47 states that, "No
franchise shall be granted to any other person or agency x x x unless and
except to the extent that the board of directors consents thereto x x
x subject to review by the Administration." Section 47 creates a glaring
exception to the absolute prohibition in the Constitution. Clearly, it is patently
unconstitutional.

Section 47 gives the BOD and the LWUA the authority to make an exception
to the absolute prohibition in the Constitution. In short, the BOD and the
LWUA are given the discretion to create franchises that are exclusive in
character. The BOD and the LWUA are not even legislative bodies. The BOD
is not a regulatory body but simply a management board of a water district.
Indeed, neither the BOD nor the LWUA can be granted the power to create
any exception to the absolute prohibition in the Constitution, a power that
Congress itself cannot exercise.

In Metropolitan Cebu Water District v. Adala,33 the Court categorically

declared Section 47 void. The Court held that:

Nonetheless, while the prohibition in Section 47 of P.D. 198 applies to the

issuance of CPCs for the reasons discussed above, the same provision must
be deemed void ab initio for being irreconcilable with Article XIV,
Section 5 of the 1973 Constitution which was ratified on January 17, 1973
— the constitution in force when P.D. 198 was issued on May 25, 1973.
Thus, Section 5 of Art. XIV of the 1973 Constitution reads:

"SECTION 5. No franchise, certificate, or any other form of authorization for

the operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of the capital of which is owned by such
citizens, nor shall such franchise, certificate, or authorization be exclusive
in character or for a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition that it shall be subject
to amendment, alteration, or repeal by the Batasang Pambansa when the
public interest so requires. The State shall encourage equity participation in
public utiltities by the general public. The participation of foreign investors in
the governing body of any public utility enterprise shall be limited to their
proportionate share in the capital thereof."

This provision has been substantially reproduced in Article XII Section 11 of

the 1987 Constitution, including the prohibition against exclusive franchises.
xxxx

Since Section 47 of P.D. 198, which vests an "exclusive franchise" upon

public utilities, is clearly repugnant to Article XIV, Section 5 of the 1973
Constitution, it is unconstitutional and may not, therefore, be relied upon
by petitioner in support of its opposition against respondent’s application for
CPC and the subsequent grant thereof by the NWRB.

WHEREFORE, Section 47 of P.D. 198 is unconstitutional.34 (Emphasis

supplied)

The dissenting opinion declares Section 47 valid and constitutional. In effect,

the dissenting opinion holds that (1) President Marcos can create indirectly
franchises that are exclusive in character; (2) the BOD can create directly
franchises that are exclusive in character; (3) the LWUA can create directly
franchises that are exclusive in character; and (4) the Court should allow the
creation of franchises that are exclusive in character.

Stated differently, the dissenting opinion holds that (1) President Marcos can
violate indirectly the Constitution; (2) the BOD can violate directly the
Constitution; (3) the LWUA can violate directly the Constitution; and (4) the
Court should allow the violation of the Constitution.

The dissenting opinion states that the BOD and the LWUA can create
franchises that are exclusive in character "based on reasonable and legitimate
grounds," and such creation "should not be construed as a violation of the
constitutional mandate on the non-exclusivity of a franchise" because it
"merely refers to regulation" which is part of "the government’s inherent right
to exercise police power in regulating public utilities" and that their violation of
the Constitution "would carry with it the legal presumption that public officers
regularly perform their official functions." The dissenting opinion states that:

To begin with, a government agency’s refusal to grant a franchise to another

entity, based on reasonable and legitimate grounds, should not be construed
as a violation of the constitutional mandate on the non-exclusivity of a
franchise; this merely refers to regulation, which the Constitution does not
prohibit. To say that a legal provision is unconstitutional simply because it
enables a government instrumentality to determine the propriety of granting a
franchise is contrary to the government’s inherent right to exercise police
power in regulating public utilities for the protection of the public and the
utilities themselves. The refusal of the local water district or the LWUA to
consent to the grant of other franchises would carry with it the legal
presumption that public officers regularly perform their official functions.

The dissenting opinion states two "reasonable and legitimate grounds" for the
creation of exclusive franchise: (1) protection of "the government’s
investment,"35 and (2) avoidance of "a situation where ruinous competition
could compromise the supply of public utilities in poor and remote areas."36
There is no "reasonable and legitimate" ground to violate the Constitution.
The Constitution should never be violated by anyone. Right or wrong, the
President, Congress, the Court, the BOD and the LWUA have no choice but
to follow the Constitution. Any act, however noble its intentions, is void if it
violates the Constitution. This rule is basic.

In Social Justice Society,37 the Court held that, "In the discharge of their
defined functions, the three departments of government have no choice
but to yield obedience to the commands of the Constitution. Whatever
limits it imposes must be observed."38 In Sabio,39 the Court held that, "the
Constitution is the highest law of the land. It is ‘the basic and paramount
law to which x x x all persons, including the highest officials of the land,
must defer. No act shall be valid, however noble its intentions, if it
conflicts with the Constitution.’"40 In Bengzon v. Drilon,41 the Court held
that, "the three branches of government must discharge their respective
functions within the limits of authority conferred by the
42 43
Constitution."  In Mutuc v. Commission on Elections,  the Court held that,
"The three departments of government in the discharge of the functions
with which it is [sic] entrusted have no choice but to yield obedience
to [the Constitution’s] commands. Whatever limits it imposes must be
observed."44

Police power does not include the power to violate the Constitution. Police
power is the plenary power vested in Congress to make
laws not repugnant to the Constitution. This rule is basic.

In Metropolitan Manila Development Authority v. Viron Transportation Co.,

Inc.,45 the Court held that, "Police power is the plenary power vested in the
legislature to make, ordain, and establish wholesome and reasonable laws,
statutes and ordinances, not repugnant to the Constitution."46 In Carlos
Superdrug Corp. v. Department of Social Welfare and Development,47 the
Court held that, police power "is ‘the power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes, and ordinances x x x not repugnant to the
constitution.’"48 In Metropolitan Manila Development Authority v. Garin,49 the
Court held that, "police power, as an inherent attribute of sovereignty, is the
power vested by the Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable laws, statutes and
ordinances x x x not repugnant to the Constitution."50

There is no question that the effect of Section 47 is the creation of franchises

that are exclusive in character. Section 47 expressly allows the BOD and the
LWUA to create franchises that are exclusive in character.

The dissenting opinion explains why the BOD and the LWUA should be
allowed to create franchises that are exclusive in character — to protect "the
government’s investment" and to avoid "a situation where ruinous competition
could compromise the supply of public utilities in poor and remote areas." The
dissenting opinion declares that these are "reasonable and legitimate
grounds." The dissenting opinion also states that, "The refusal of the local
water district or the LWUA to consent to the grant of other franchises would
carry with it the legal presumption that public officers regularly perform their
official functions."

When the effect of a law is unconstitutional, it is void. In Sabio,51 the Court

held that, "A statute may be declared unconstitutional because it is not
within the legislative power to enact; or it creates or establishes methods or
forms that infringe constitutional principles; or its purpose or effect violates
the Constitution or its basic principles."52 The effect of Section 47 violates
the Constitution, thus, it is void.

In Strategic Alliance Development Corporation v. Radstock Securities

Limited,53 the Court held that, "This Court must perform its duty to defend and
uphold the Constitution."54 In Bengzon,55 the Court held that, "The Constitution
expressly confers on the judiciary the power to maintain inviolate what it
decrees."56 In Mutuc,57 the Court held that:

The concept of the Constitution as the fundamental law, setting forth the
criterion for the validity of any public act whether proceeding from the highest
official or the lowest functionary, is a postulate of our system of government.
That is to manifest fealty to the rule of law, with priority accorded to that which
occupies the topmost rung in the legal hierarchy. The three departments of
government in the discharge of the functions with which it is [sic] entrusted
have no choice but to yield obedience to its commands. Whatever limits it
imposes must be observed. Congress in the enactment of statutes must ever
be on guard lest the restrictions on its authority, whether substantive or
formal, be transcended. The Presidency in the execution of the laws cannot
ignore or disregard what it ordains. In its task of applying the law to the facts
as found in deciding cases, the judiciary is called upon to maintain inviolate
what is decreed by the fundamental law. Even its power of judicial review to
pass upon the validity of the acts of the coordinate branches in the course of
adjudication is a logical corollary of this basic principle that the Constitution is
paramount. It overrides any governmental measure that fails to live up to its
mandates. Thereby there is a recognition of its being the supreme law.58

Sustaining the RTC’s ruling would make a dangerous precedent. It will allow
Congress to do indirectly what it cannot do directly. In order to circumvent the
constitutional prohibition on franchises that are exclusive in character, all
Congress has to do is to create a law allowing the BOD and the LWUA to
create franchises that are exclusive in character, as in the present case.

WHEREFORE, we GRANT the petition. We DECLARE Section 47 of

Presidential Decree No. 198 UNCONSTITUTIONAL. We SET ASIDE the 1
October 2004 Judgment and 6 November 2004 Order of the Regional Trial
Court, Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No.
03-CV-1878 and REINSTATE the 23 July 2002 Resolution and 15 August
2002 Decision of the National Water Resources Board.

SO ORDERED.
G.R. No. 170139               August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.

DECISION

LEONEN, J.:

This case involves an overseas Filipino worker with shattered dreams. It is our
duty, given the facts and the law, to approximate justice for her.

We are asked to decide a petition for review1 on certiorari assailing the Court
of Appeals’ decision2 dated June 27, 2005. This decision partially affirmed the
National Labor Relations Commission’s resolution dated March 31,
2004,3 declaring respondent’s dismissal illegal, directing petitioner to pay
respondent’s three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorney’s fees.4

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and

placement agency.5 Responding to an ad it published, respondent, Joy C.
Cabiles, submitted her application for a quality control job in Taiwan.6

Joy’s application was accepted.7 Joy was later asked to sign a one year
employment contract for a monthly salary of NT$15,360.00.8 She alleged that
Sameer Overseas Agency required her to pay a placement fee of ₱70,000.00
when she signed the employment contract.9

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997.10 She alleged that in her employment contract, she agreed to work as
quality control for one year.11 In Taiwan, she was asked to work as a cutter.12

Sameer Overseas Placement Agency claims that on July 14, 1997, a certain
Mr. Huwang from Wacoal informed Joy, without prior notice, that she was
terminated and that "she should immediately report to their office to get her
salary and passport."13 She was asked to "prepare for immediate
repatriation."14

Joy claims that she was told that from June 26 to July 14, 1997, she only
earned a total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to
cover her plane ticket to Manila.16

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations
Commission against petitioner and Wacoal. She claimed that she was illegally
dismissed.18 She asked for the return of her placement fee, the withheld
amount for repatriation costs, payment of her salary for 23 months as well as
moral and exemplary damages.19 She identified Wacoal as Sameer Overseas
Placement Agency’s foreign principal.20
Sameer Overseas Placement Agency alleged that respondent's termination
was due to her inefficiency, negligence in her duties, and her "failure to
comply with the work requirements [of] her foreign [employer]."21 The agency
also claimed that it did not ask for a placement fee of ₱70,000.00.22 As
evidence, it showed Official Receipt No. 14860 dated June 10, 1997, bearing
the amount of ₱20,360.00.23 Petitioner added that Wacoal's accreditation with
petitioner had already been transferred to the Pacific Manpower &
Management Services, Inc. (Pacific) as of August 6, 1997.24 Thus, petitioner
asserts that it was already substituted by Pacific Manpower.25

Pacific Manpower moved for the dismissal of petitioner’s claims against it.26 It
alleged that there was no employer-employee relationship between
them.27 Therefore, the claims against it were outside the jurisdiction of the
Labor Arbiter.28 Pacific Manpower argued that the employment contract
should first be presented so that the employer’s contractual obligations might
be identified.29 It further denied that it assumed liability for petitioner’s illegal
acts.30

On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint.31 Acting

Executive Labor Arbiter Pedro C.Ramos ruled that her complaint was based
on mere allegations.32 The Labor Arbiter found that there was no excess
payment of placement fees, based on the official receipt presented by
petitioner.33 The Labor Arbiter found unnecessary a discussion on petitioner’s
transfer of obligations to Pacific34 and considered the matter immaterial in
view of the dismissal of respondent’s complaint.35

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations

Commission declared that Joy was illegally dismissed.38 It reiterated the
doctrine that the burden of proof to show that the dismissal was based on a
just or valid cause belongs to the employer.39 It found that Sameer Overseas
Placement Agency failed to prove that there were just causes for
termination.40 There was no sufficient proof to show that respondent was
inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process was not observed in
terminating respondent.42

The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction.43 It refused to
entertain the issue of the alleged transfer of obligations to Pacific. 44 It did not
acquire jurisdiction over that issue because Sameer Overseas Placement
Agency failed to appeal the Labor Arbiter’s decision not to rule on the
matter.45

The National Labor Relations Commission awarded respondent only three (3)
months worth of salary in the amount of NT$46,080, the reimbursement of the
NT$3,000 withheld from her, and attorney’s fees of NT$300.46
The Commission denied the agency’s motion for reconsideration 47 dated May
12, 2004 through a resolution48 dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the

filing of a petition49 for certiorari with the Court of Appeals assailing the
National Labor Relations Commission’s resolutions dated March 31, 2004 and
July 2, 2004.

The Court of Appeals50 affirmed the decision of the National Labor Relations

Commission with respect to the finding of illegal dismissal, Joy’s entitlement to
the equivalent of three months worth of salary, reimbursement of withheld
repatriation expense, and attorney’s fees.51 The Court of Appeals remanded
the case to the National Labor Relations Commission to address the validity
of petitioner's allegations against Pacific.52 The Court of Appeals held, thus:
Although the public respondent found the dismissal of the complainant-
respondent illegal, we should point out that the NLRC merely awarded her
three (3) months backwages or the amount of NT$46,080.00, which was
based upon its finding that she was dismissed without due process, a finding
that we uphold, given petitioner’s lack of worthwhile discussion upon the same
in the proceedings below or before us. Likewise we sustain NLRC’s finding in
regard to the reimbursement of her fare, which is squarely based on the law;
as well as the award of attorney’s fees.

But we do find it necessary to remand the instant case to the public

respondent for further proceedings, for the purpose of addressing the validity
or propriety of petitioner’s third-party complaint against the transferee agent or
the Pacific Manpower & Management Services, Inc. and Lea G. Manabat. We
should emphasize that as far as the decision of the NLRC on the claims of
Joy Cabiles, is concerned, the same is hereby affirmed with finality, and we
hold petitioner liable thereon, but without prejudice to further hearings on its
third party complaint against Pacific for reimbursement.

WHEREFORE, premises considered, the assailed Resolutions are hereby

partly AFFIRMED in accordance with the foregoing discussion, but subject to
the caveat embodied inthe last sentence. No costs.

SO ORDERED.53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.54

We are asked to determine whether the Court of Appeals erred when it

affirmed the ruling of the National Labor Relations Commission finding
respondent illegally dismissed and awarding her three months’ worth of
salary, the reimbursement of the cost of her repatriation, and attorney’s fees
despite the alleged existence of just causes of termination.

Petitioner reiterates that there was just cause for termination because there
was a finding of Wacoal that respondent was inefficient in her work.55

Therefore, it claims that respondent’s dismissal was valid.56

Petitioner also reiterates that since Wacoal’s accreditation was validly
transferred to Pacific at the time respondent filed her complaint, it should be
Pacific that should now assume responsibility for Wacoal’s contractual
obligations to the workers originally recruited by petitioner.57

Sameer Overseas Placement Agency’spetition is without merit. We find for

respondent.

Sameer Overseas Placement Agency failed to show that there was just cause
for causing Joy’s dismissal. The employer, Wacoal, also failed to accord her
due process of law.

Indeed, employers have the prerogative to impose productivity and quality

standards at work.58 They may also impose reasonable rules to ensure that
the employees comply with these standards.59 Failure to comply may be a just
cause for their dismissal.60 Certainly, employers cannot be compelled to retain
the services of anemployee who is guilty of acts that are inimical to the
interest of the employer.61 While the law acknowledges the plight and
vulnerability of workers, it does not "authorize the oppression or self-
destruction of the employer."62 Management prerogative is recognized in law
and in our jurisprudence.

This prerogative, however, should not be abused. It is "tempered with the

employee’s right to security of tenure."63 Workers are entitled to substantive
and procedural due process before termination. They may not be removed
from employment without a validor just cause as determined by law and
without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution.64

Employees are not stripped of their security of tenure when they move to work
in a different jurisdiction. With respect to the rights of overseas Filipino
workers, we follow the principle of lex loci contractus.Thus, in Triple Eight
Integrated Services, Inc. v. NLRC,65 this court noted:

Petitioner likewise attempts to sidestep the medical certificate requirement by

contending that since Osdana was working in Saudi Arabia, her employment
was subject to the laws of the host country. Apparently, petitioner hopes
tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of
employees due to illness.

Again, petitioner’s argument is without merit.

First, established is the rule that lex loci contractus (the law of the place where
the contract is made) governs in this jurisdiction. There is no question that the
contract of employment in this case was perfected here in the Philippines.
Therefore, the Labor Code, its implementing rules and regulations, and other
laws affecting labor apply in this case.Furthermore, settled is the rule that the
courts of the forum will not enforce any foreign claim obnoxious to the forum’s
public policy. Herein the Philippines, employment agreements are more than
contractual in nature. The Constitution itself, in Article XIII, Section 3,
guarantees the special protection of workers, to wit:

The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to selforganization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. Theyshall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

....

This public policy should be borne in mind in this case because to allow
foreign employers to determine for and by themselves whether an overseas
contract worker may be dismissed on the ground of illness would encourage
illegal or arbitrary pretermination of employment contracts.66 (Emphasis
supplied, citation omitted)

Even with respect to fundamental procedural rights, this court emphasized in

PCL Shipping Philippines, Inc. v. NLRC,67 to wit:

Petitioners admit that they did notinform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to
give him opportunity to air his side. However, petitioners contend that the twin
requirements ofnotice and hearing applies strictly only when the employment
is within the Philippines and that these need not be strictly observed in cases
of international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees
whether working within the Philippines or abroad. Moreover, the principle of
lex loci contractus (the law of the place where the contract is made) governs
in this jurisdiction. In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent
was executed here in the Philippines with the approval of the Philippine
Overseas Employment Administration (POEA). Hence, the Labor Code
together with its implementing rules and regulations and other laws affecting
labor apply in this case.68 (Emphasis supplied, citations omitted)

By our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process
requirements.
Article 282 of the Labor Code enumerates the just causes of termination by
the employer. Thus:

Art. 282. Termination by employer. An employer may terminate an

employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of

his employer or any immediate member of his family or his duly authorized
representatives; and

(e) Other causes analogous to the foregoing.

Petitioner’s allegation that respondentwas inefficient in her work and negligent

in her duties69 may, therefore, constitute a just cause for termination under
Article 282(b), but only if petitioner was able to prove it.

The burden of proving that there is just cause for termination is on the
employer. "The employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause." 70 Failure to show that
there was valid or just cause for termination would necessarily mean that the
dismissal was illegal.71

To show that dismissal resulting from inefficiency in work is valid, it must be

shown that: 1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated tothe employee; and 3) the
communication was made at a reasonable time prior to the employee’s
performance assessment.

This is similar to the law and jurisprudence on probationary employees, which

allow termination ofthe employee only when there is "just cause or when [the
probationary employee] fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee at
the time of his [or her] engagement."72

However, we do not see why the application of that ruling should be limited to
probationary employment. That rule is basic to the idea of security of tenure
and due process, which are guaranteed to all employees, whether their
employment is probationary or regular.

The pre-determined standards that the employer sets are the bases for
determining the probationary employee’s fitness, propriety, efficiency, and
qualifications as a regular employee. Due process requires that the
probationary employee be informed of such standards at the time of his or her
engagement so he or she can adjusthis or her character or workmanship
accordingly. Proper adjustment to fit the standards upon which the
employee’s qualifications will be evaluated will increase one’s chances of
being positively assessed for regularization by his or her employer.

Assessing an employee’s work performance does not stop after

regularization. The employer, on a regular basis, determines if an employee is
still qualified and efficient, based on work standards. Based on that
determination, and after complying with the due process requirements of
notice and hearing, the employer may exercise its management prerogative of
terminating the employee found unqualified.

The regular employee must constantlyattempt to prove to his or her employer

that he or she meets all the standards for employment. This time, however,
the standards to be met are set for the purpose of retaining employment or
promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him or
her. Courts should remain vigilant on allegations of the employer’s failure to
communicatework standards that would govern one’s employment "if [these
are] to discharge in good faith [their] duty to adjudicate."73

In this case, petitioner merely alleged that respondent failed to comply with
her foreign employer’s work requirements and was inefficient in her work.74 No
evidence was shown to support such allegations. Petitioner did not even
bother to specify what requirements were not met, what efficiency standards
were violated, or what particular acts of respondent constituted inefficiency.

There was also no showing that respondent was sufficiently informed of the
standards against which her work efficiency and performance were judged.
The parties’ conflict as to the position held by respondent showed that even
the matter as basic as the job title was not clear.

The bare allegations of petitioner are not sufficient to support a claim that
there is just cause for termination. There is no proof that respondent was
legally terminated.

Petitioner failed to comply with

the due process requirements

Respondent’s dismissal less than one year from hiring and her repatriation on
the same day show not onlyfailure on the partof petitioner to comply with the
requirement of the existence of just cause for termination. They patently show
that the employersdid not comply with the due process requirement.

A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal.75 The employer is required to give the charged
employee at least two written notices before termination. 76 One of the written
notices must inform the employee of the particular acts that may cause his or
her dismissal.77 The other notice must "[inform] the employee of the
employer’s decision."78 Aside from the notice requirement, the employee must
also be given "an opportunity to be heard."79

Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month
from her first workday. She was also repatriated on the same day that she
was informed of her termination. The abruptness of the termination negated
any finding that she was properly notified and given the opportunity to be
heard. Her constitutional right to due process of law was violated.

II

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her

salary for the unexpired portion of the employment contract that was violated
together with attorney’s fees and reimbursement of amounts withheld from her
salary.

Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers

and Overseas Filipinos Act of 1995, states that overseas workers who were
terminated without just, valid, or authorized cause "shall be entitled to the full
reimbursement of his placement fee with interest of twelve (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less."

Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the

contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency

for any and all claims under this section shall be joint and several. This
provisions [sic] shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within four (4)
months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or

authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of twelve (12%)
per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term,
whichever is less.

....

(Emphasis supplied)

Section 15 of Republic Act No. 8042 states that "repatriation of the worker and
the transport of his [or her] personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker overseas."
The exception is when "termination of employment is due solely to the fault of
the worker,"80 which as we have established, is not the case. It reads: SEC.
15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND.
– The repatriation of the worker and the transport of his personal belongings
shall be the primary responsibility of the agency which recruited or deployed
the worker overseas. All costs attendant to repatriation shall be borne by or
charged to the agency concerned and/or its principal. Likewise, the
repatriation of remains and transport of the personal belongings of a
deceased worker and all costs attendant thereto shall be borne by the
principal and/or local agency. However, in cases where the termination of
employment is due solely to the fault of the worker, the principal/employer or
agency shall not in any manner be responsible for the repatriation of the
former and/or his belongings.

....

The Labor Code81 also entitles the employee to 10% of the amount of withheld
wages as attorney’s feeswhen the withholding is unlawful.

The Court of Appeals affirmedthe National Labor Relations Commission’s

decision to award respondent NT$46,080.00 or the threemonth equivalent of
her salary, attorney’s fees of NT$300.00, and the reimbursement of the
withheld NT$3,000.00 salary, which answered for her repatriation.

We uphold the finding that respondent is entitled to all of these awards. The
award of the three-month equivalent of respondent’s salary should, however,
be increased to the amount equivalent to the unexpired term of the
employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co.,

Inc.,82 this court ruled that the clause "or for three (3) months for every year of
the unexpired term, whichever is less"83 is unconstitutional for violating the
equal protection clause and substantive due process.84

A statute or provision which was declared unconstitutional is not a law. It

"confers no rights; it imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all."85

We are aware that the clause "or for three (3) months for every year of the
unexpired term, whichever is less"was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic
Act No. 10022 provides:

Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby

amended to read as follows:

SEC. 10. Money Claims.– Notwithstanding any provision of law to the

contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.

The liability of the principal/employer and the recruitment/placement agency

for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.

Any compromise/amicable settlement or voluntary agreement on money

claims inclusive of damages under this section shall be paid within thirty (30)
days from approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or

authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker’s salary, the worker shall be entitled to the
full reimbursement if [sic] his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.

In case of a final and executory judgement against a foreign

employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it fully
satisfies the judgement award.

Noncompliance with the mandatory periods for resolutions of case

providedunder this section shall subject the responsible officials to any or all
of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.

Provided, however,That the penalties herein provided shall be without

prejudice to any liability which any such official may have incured [sic] under
other existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph. (Emphasis supplied)

Republic Act No. 10022 was promulgated on March 8, 2010. This means that
the reinstatement of the clause in Republic Act No. 8042 was not yet in effect
at the time of respondent’s termination from work in 1997. 86 Republic Act No.
8042 before it was amended byRepublic Act No. 10022 governs this case.

When a law is passed, this court awaits an actual case that clearly raises
adversarial positions in their proper context before considering a prayer to
declare it as unconstitutional.

However, we are confronted with a unique situation. The law passed

incorporates the exact clause already declared as unconstitutional, without
any perceived substantial change in the circumstances.

This may cause confusion on the part of the National Labor Relations
Commission and the Court of Appeals.At minimum, the existence of Republic
Act No. 10022 may delay the execution of the judgment in this case, further
frustrating remedies to assuage the wrong done to petitioner.

Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to "[p]romulgate

rules concerning the protection and enforcement of constitutional
rights."87 When cases become mootand academic, we do not hesitate to
provide for guidance to bench and bar in situations where the same violations
are capable of repetition but will evade review. This is analogous to cases
where there are millions of Filipinos working abroad who are bound to suffer
from the lack of protection because of the restoration of an identical clause in
a provision previously declared as unconstitutional.

In the hierarchy of laws, the Constitution is supreme. No branch or office of

the government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such
exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a
nullity.

Thus, when a law or a provision of law is null because it is inconsistent with

the Constitution,the nullity cannot be cured by reincorporation or reenactment
of the same or a similar law or provision. A law or provision of law that was
already declared unconstitutional remains as such unless circumstances have
so changed as to warrant a reverse conclusion.

We are not convinced by the pleadings submitted by the parties that the
situation has so changed so as to cause us to reverse binding precedent.

Likewise, there are special reasons of judicial efficiency and economy that
attend to these cases. The new law puts our overseas workers in the same
vulnerable position as they were prior to Serrano. Failure to reiterate the very
ratio decidendi of that case will result in the same untold economic hardships
that our reading of the Constitution intended to avoid. Obviously, we cannot
countenance added expenses for further litigation thatwill reduce their
hardearned wages as well as add to the indignity of having been deprived of
the protection of our laws simply because our precedents have not been
followed. There is no constitutional doctrine that causes injustice in the face of
empty procedural niceties. Constitutional interpretation is complex, but it is
never unreasonable.

Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the
Office of the Solicitor General to comment on the constitutionality of the
reinstated clause in Republic Act No. 10022.

In its comment,89 petitioner argued that the clause was constitutional.90 The

legislators intended a balance between the employers’ and the employees’
rights by not unduly burdening the local recruitment agency.91 Petitioner is
also of the view that the clause was already declared as constitutional in
Serrano.92

The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the
constitutionality of the clause asreinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.94
On the other hand, respondent argued that the clause was unconstitutional
because it infringed on workers’ right to contract.95

We observe that the reinstated clause, this time as provided in Republic Act.
No. 10022, violates the constitutional rights to equal protection and due
process.96 Petitioner as well as the Solicitor General have failed to show any
compelling changein the circumstances that would warrant us to revisit the
precedent.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that
should be recovered by an illegally dismissed overseas worker to three
months is both a violation of due process and the equal protection clauses of
the Constitution.

Equal protection of the law is a guarantee that persons under like

circumstances and falling within the same class are treated alike, in terms of
"privileges conferred and liabilities enforced."97 It is a guarantee against
"undue favor and individual or class privilege, as well as hostile discrimination
or the oppression of inequality."98

In creating laws, the legislature has the power "to make distinctions and
classifications."99

In exercising such power, it has a wide discretion.100

The equal protection clause does not infringe on this legislative power.101 A
law is void on this basis, only if classifications are made arbitrarily.102 There is
no violation of the equal protection clause if the law applies equally to persons
within the same class and if there are reasonable grounds for distinguishing
between those falling within the class and those who do not fall within the
class.103 A law that does not violate the equal protection clause prescribesa
reasonable classification.104

A reasonable classification "(1) must rest on substantial distinctions; (2) must

be germane to the purposes of the law; (3) must not be limited to existing
conditions only; and (4) must apply equally to all members of the same
class."105

The reinstated clause does not satisfy the requirement of reasonable

classification.

In Serrano, we identified the classifications made by the reinstated clause. It

distinguished between fixed-period overseas workers and fixed period local
workers.106 It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment
contracts of at least one year.107 Within the class of overseas workers with at
least one-year employment contracts, there was a distinction between those
with at least a year left in their contracts and those with less than a year left in
their contracts when they were illegally dismissed.108
The Congress’ classification may be subjected to judicial review. In Serrano,
there is a "legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a
suspect class."109

Under the Constitution, labor is afforded special protection.110 Thus, this court

in Serrano, "[i]mbued with the same sense of ‘obligation to afford protection to
labor,’ . . . employ[ed] the standard of strict judicial scrutiny, for it perceive[d]
in the subject clause a suspect classification prejudicial to OFWs."111

We also noted in Serrano that before the passage of Republic Act No. 8042,
the money claims of illegally terminated overseas and local workers with
fixed-term employment were computed in the same manner.112 Their money
claims were computed based on the "unexpired portions of their
contracts."113 The adoption of the reinstated clause in Republic Act No. 8042
subjected the money claims of illegally dismissed overseas workers with an
unexpired term of at least a year to a cap of three months worth of their
salary.114 There was no such limitation on the money claims of illegally
terminated local workers with fixed-term employment.115

We observed that illegally dismissed overseas workers whose employment

contracts had a term of less than one year were granted the amount
equivalent to the unexpired portion of their employment
116
contracts.  Meanwhile, illegally dismissed overseas workers with
employment terms of at least a year were granted a cap equivalent to three
months of their salary for the unexpired portions of their contracts.117

Observing the terminologies used inthe clause, we also found that "the
subject clause creates a sub-layer of discrimination among OFWs whose
contract periods are for more than one year: those who are illegally dismissed
with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered
by the reinstated clause, and their monetary benefits limited to their salaries
for three months only."118

We do not need strict scrutiny to conclude that these classifications do not

rest on any real or substantial distinctions that would justify different
treatments in terms of the computation of money claims resulting from illegal
termination.

Overseas workers regardless of their classifications are entitled to security of

tenure, at least for the period agreed upon in their contracts. This means that
they cannot be dismissed before the end of their contract terms without due
process. If they were illegally dismissed, the workers’ right to security of
tenure is violated.

The rights violated when, say, a fixed-period local worker is illegally

terminated are neither greater than norless than the rights violated when a
fixed-period overseas worker is illegally terminated. It is state policy to protect
the rights of workers without qualification as to the place of employment.119 In
both cases, the workers are deprived of their expected salary, which they
could have earned had they not been illegally dismissed. For both workers,
this deprivation translates to economic insecurity and disparity. 120 The same is
true for the distinctions between overseas workers with an employment
contract of less than one year and overseas workers with at least one year of
employment contract, and between overseas workers with at least a year left
in their contracts and overseas workers with less than a year left in their
contracts when they were illegally dismissed.

For this reason, we cannot subscribe to the argument that "[overseas workers]
are contractual employeeswho can never acquire regular employment status,
unlike local workers"121 because it already justifies differentiated treatment in
terms ofthe computation of money claims.122

Likewise, the jurisdictional and enforcement issues on overseas workers’

money claims do not justify a differentiated treatment in the computation of
their money claims.123 If anything, these issues justify an equal, if not greater
protection and assistance to overseas workers who generally are more prone
to exploitation given their physical distance from our government.

We also find that the classifications are not relevant to the purpose of the law,
which is to "establish a higher standard of protection and promotion of the
welfare of migrant workers, their families and overseas Filipinos in distress,
and for other purposes."124 Further, we find specious the argument that
reducing the liability of placement agencies "redounds to the benefit of the
[overseas] workers."125

Putting a cap on the money claims of certain overseas workers does not
increase the standard of protection afforded to them. On the other hand,
foreign employers are more incentivized by the reinstated clause to enter into
contracts of at least a year because it gives them more flexibility to violate our
overseas workers’ rights. Their liability for arbitrarily terminating overseas
workers is decreased at the expense of the workers whose rights they
violated. Meanwhile, these overseas workers who are impressed with an
expectation of a stable job overseas for the longer contract period disregard
other opportunities only to be terminated earlier. They are left with claims that
are less than what others in the same situation would receive. The reinstated
clause, therefore, creates a situation where the law meant to protect them
makes violation of rights easier and simply benign to the violator.

As Justice Brion said in his concurring opinion in Serrano:

Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in
fact provides a hidden twist affecting the principal/employer’s liability. While
intended as an incentive accruing to recruitment/manning agencies, the law,
as worded, simply limits the OFWs’ recovery in wrongfuldismissal situations.
Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer – the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 – read as a grant of incentives to
recruitment/manning agencies – oversteps what it aims to do by effectively
limiting what is otherwise the full liability of the foreign principals/employers.
Section 10, in short, really operates to benefit the wrong party and allows that
party, without justifiable reason, to mitigate its liability for wrongful dismissals.
Because of this hidden twist, the limitation ofliability under Section 10 cannot
be an "appropriate" incentive, to borrow the term that R.A. No. 8042 itself
uses to describe the incentive it envisions under its purpose clause.

What worsens the situation is the chosen mode of granting the incentive:
instead of a grant that, to encourage greater efforts at recruitment, is directly
related to extra efforts undertaken, the law simply limits their liability for the
wrongful dismissals of already deployed OFWs. This is effectively a legally-
imposed partial condonation of their liability to OFWs, justified solely by the
law’s intent to encourage greater deployment efforts. Thus, the incentive,from
a more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .

The so-called incentive is rendered particularly odious by its effect on the

OFWs — the benefits accruing to the recruitment/manning agencies and their
principals are takenfrom the pockets of the OFWs to whom the full salaries for
the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from
their violation of the security of tenure that an employment contract embodies.
Conversely, lesser protection is afforded the OFW, not only because of the
lessened recovery afforded him or her by operation of law, but also because
this same lessened recovery renders a wrongful dismissal easier and less
onerous to undertake; the lesser cost of dismissing a Filipino will always bea
consideration a foreign employer will take into account in termination of
employment decisions. . . .126

Further, "[t]here can never be a justification for any form of government action
that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses suchas placement agencies, while the disadvantaged sector is
composed ofOFWs whose protection no less than the Constitution
commands. The idea thatprivate business interest can be elevated to the level
of a compelling state interest is odious."127

Along the same line, we held that the reinstated clause violates due process
rights. It is arbitrary as it deprives overseas workers of their monetary claims
without any discernable valid purpose.128

Respondent Joy Cabiles is entitled to her salary for the unexpired portion of
her contract, in accordance with Section 10 of Republic Act No. 8042. The
award of the three-month equivalence of respondent’s salary must be
modified accordingly. Since she started working on June 26, 1997 and was
terminated on July 14, 1997, respondent is entitled to her salary from July 15,
1997 to June 25, 1998. "To rule otherwise would be iniquitous to petitioner
and other OFWs, and would,in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an
OFW’s security of tenure which an employment contract embodies and
actually profit from such violation based on an unconstitutional provision of
law."129

III

On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June
21, 2013, which revised the interest rate for loan or forbearance from 12% to
6% in the absence of stipulation,applies in this case. The pertinent portions of
Circular No. 799, Series of 2013, read: The Monetary Board, in its Resolution
No. 796 dated 16 May 2013, approved the following revisions governing the
rate of interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the absence of an
express contract as to such rateof interest, shall be six percent (6%) per
annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of

Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby
amended accordingly.

This Circular shall take effect on 1 July 2013.

Through the able ponencia of Justice Diosdado Peralta, we laid down the
guidelines in computing legal interest in Nacar v. Gallery Frames:130

II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of

money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence
of stipulation, the rate of interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is

breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages, except when or until
the demand can be established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code), but when such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to run only from the date
the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount
finally adjudged. 3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 6% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein.131

Circular No. 799 is applicable only in loans and forbearance of money, goods,
or credits, and in judgments when there is no stipulation on the applicable
interest rate. Further, it is only applicable if the judgment did not become final
and executory before July 1, 2013.132

We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,133 these interest rates do not apply when the law provides that a
different interest rate shall be applied. "[A] Central Bank Circular cannot
repeal a law. Only a law can repeal another law."134

For example, Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannotrepeal Republic Act No. 8042, the issuance of
Circular No. 799 does not have the effect of changing the interest on awards
for reimbursement of placement fees from 12% to 6%. This is despite Section
1 of Circular No. 799, which provides that the 6% interest rate applies even to
judgments.

Moreover, laws are deemed incorporated in contracts. "The contracting

parties need not repeat them. They do not even have to be referred to. Every
contract, thus, contains not only what has been explicitly stipulated, but the
statutory provisions that have any bearing on the matter." 135 There is,
therefore, an implied stipulation in contracts between the placement agency
and the overseasworker that in case the overseas worker is adjudged as
entitled to reimbursement of his or her placement fees, the amount shall be
subject to a 12% interest per annum. This implied stipulation has the effect of
removing awards for reimbursement of placement fees from Circular No.
799’s coverage.

The same cannot be said for awardsof salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are
covered by Circular No. 799 because the law does not provide for a specific
interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013
and there was no stipulation in the contract providing for a different interest
rate, other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.

This means that respondent is also entitled to an interest of 6% per annum on

her money claims from the finality of this judgment.

IV

Finally, we clarify the liabilities of Wacoal as principal and petitioner as the

employment agency that facilitated respondent’s overseas employment.

Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995

provides that the foreign employer and the local employment agency are
jointly and severally liable for money claims including claims arising out of an
employer-employee relationship and/or damages. This section also provides
that the performance bond filed by the local agency shall be answerable for
such money claims or damages if they were awarded to the employee.

This provision is in line with the state’s policy of affording protection to labor
and alleviating workers’ plight.136

In overseas employment, the filing of money claims against the foreign

employer is attended by practical and legal complications.1âwphi1 The
distance of the foreign employer alonemakes it difficult for an overseas worker
to reach it and make it liable for violations of the Labor Code. There are also
possible conflict of laws, jurisdictional issues, and procedural rules that may
be raised to frustrate an overseas worker’sattempt to advance his or her
claims.

It may be argued, for instance, that the foreign employer must be impleaded
in the complaint as an indispensable party without which no final
determination can be had of an action.137

The provision on joint and several liability in the Migrant Workers and
Overseas Filipinos Act of 1995 assures overseas workers that their rights will
not be frustrated with these complications. The fundamental effect of joint and
several liability is that "each of the debtors is liable for the entire
obligation."138 A final determination may, therefore, be achieved even if only
oneof the joint and several debtors are impleaded in an action. Hence, in the
case of overseas employment, either the local agency or the foreign employer
may be sued for all claims arising from the foreign employer’s labor law
violations. This way, the overseas workers are assured that someone — the
foreign employer’s local agent — may be made to answer for violationsthat
the foreign employer may have committed.

The Migrant Workers and Overseas Filipinos Act of 1995 ensures that
overseas workers have recourse in law despite the circumstances of their
employment. By providing that the liability of the foreign employer may be
"enforced to the full extent"139 against the local agent,the overseas worker is
assured of immediate and sufficientpayment of what is due them.140

Corollary to the assurance of immediate recourse in law, the provision on joint

and several liability in the Migrant Workers and Overseas Filipinos Act of 1995
shifts the burden of going after the foreign employer from the overseas worker
to the local employment agency. However, it must be emphasized that the
local agency that is held to answer for the overseas worker’s money claims is
not leftwithout remedy. The law does not preclude it from going after the
foreign employer for reimbursement of whatever payment it has made to the
employee to answer for the money claims against the foreign employer.

A further implication of making localagencies jointly and severally liable with

the foreign employer is thatan additional layer of protection is afforded to
overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or
finances, local agenciesmust already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas
employment applications.

With the present state of the pleadings, it is not possible to determine whether
there was indeed a transfer of obligations from petitioner to Pacific. This
should not be an obstacle for the respondent overseas worker to proceed with
the enforcement of this judgment. Petitioner is possessed with the resources
to determine the proper legal remedies to enforce its rights against Pacific, if
any.

Many times, this court has spoken on what Filipinos may encounter as they
travel into the farthest and most difficult reaches of our planet to provide for
their families. In Prieto v. NLRC:141

The Court is not unaware of the many abuses suffered by our overseas
workers in the foreign land where they have ventured, usually with heavy
hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment,
rape, insufficient nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts towhich they are subjected
by their foreign employers, who probably feel they can do as they please in
their own country. While these workers may indeed have relatively little
defense against exploitation while they are abroad, that disadvantage must
not continue to burden them when they return to their own territory to voice
their muted complaint. There is no reason why, in their very own land, the
protection of our own laws cannot be extended to them in full measure for the
redress of their grievances.142

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a
million times over; each of their stories as real as any other. Overseas Filipino
workers brave alien cultures and the heartbreak of families left behind daily.
They would count the minutes, hours, days, months, and years yearning to
see their sons and daughters. We all know of the joy and sadness when they
come home to see them all grown up and, being so, they remember what their
work has cost them. Twitter accounts, Facetime, and many other gadgets and
online applications will never substitute for their lost physical presence.

Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show the
world the resilience, patience, and creativity of our people. Indeed, we are a
people who contribute much to the provision of material creations of this
world.

This government loses its soul if we fail to ensure decent treatment for all
Filipinos. We default by limiting the contractual wages that should be paid to
our workers when their contracts are breached by the foreign employers.
While we sit, this court will ensure that our laws will reward our overseas
workers with what they deserve: their dignity.

Inevitably, their dignity is ours as weil.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals

is AFFIRMED with modification. Petitioner Sameer Overseas Placement
Agency is ORDERED to pay respondent Joy C. Cabiles the amount
equivalent to her salary for the unexpired portion of her employment contract
at an interest of 6% per annum from the finality of this judgment. Petitioner is
also ORDERED to reimburse respondent the withheld NT$3,000.00 salary
and pay respondent attorney's fees of NT$300.00 at an interest of 6% per
annum from the finality of this judgment.

The clause, "or for three (3) months for every year of the unexpired term,
whichever is less" in Section 7 of Republic Act No. 10022 amending Section
10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null
and void.

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

MANILA PRINCE HOTEL petitioner,

vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL
CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, respondents.

BELLOSILLO, J.:

The FiIipino 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 in oked 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. . . .

b. The Highest Bidder must execute the Stock Purchase and Sale Agreement
with GSIS . . . .

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 Berhad 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 . . .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) . . .
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 —

. . . in case of doubt, the Constitution should be considered self-executing

rather than non-self-executing . . . . 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 the setting up of other financial structures, et
cetera (emphasis 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 other 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 the 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 the legislations must be based. Res
ipsa loquitur.

On the other hand, Sec. 10, second par., Art. XII of the 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 out rich natural resources but also to the cultural heritage of out
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 fro 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 x 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 x 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 GlVE 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 . . . This
provision was never found in previous Constitutions . . . .

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 counter productive 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" end 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 [if] 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 . . . 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 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 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 clearances and to do such other acts and deeds as may be
necessary for purpose.

SO ORDERED.