EN BANC

[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.
DECISION
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987
Constitution, i.e., in the grant of rights, privileges, and
concessions covering the national economy and
patrimony, the State shall give preference to qualified
Filipinos,[1] is invoked by petitioner in its bid to acquire
51% of the shares of the Manila Hotel Corporation (MHC)
which owns the historic Manila Hotel. Opposing,
respondents maintain that the provision is not selfexecuting but requires an implementing legislation for its
enforcement. Corollarily, they ask whether the 51%
shares form part of the national economy and patrimony
covered by the protective mantle of the Constitution.
The controversy arose when respondent Government
Service Insurance System (GSIS), pursuant to the
privatization program of the Philippine Government under

Proclamation No. 50 dated 8 December 1986, decided to

sell through public bidding 30% to 51% of the issued and
outstanding shares of respondent MHC. The winning
bidder, or the eventual strategic partner, is to provide
management
expertise
and/or
an
international
marketing/reservation system, and financial support to
strengthen the profitability and performance of the Manila
Hotel.[2] In a close bidding held on 18 September 1995
only two (2) bidders participated: petitioner Manila
Prince Hotel Corporation, a Filipino corporation, which
offered to buy 51% of the MHC or 15,300,000 shares
at P41.58 per share, and Renong Berhad, a Malaysian
firm, with ITT-Sheraton as its hotel operator, which bid for
the same number of shares at P44.00 per share, or P2.42
more than the bid of petitioner.
Pertinent provisions of the bidding rules prepared by
respondent GSIS state I. EXECUTION OF THE NECESSARY CONTRACTS
WITH GSIS/MHC 1. The Highest Bidder must comply with the conditions set
forth below by October 23, 1995 (reset to November 3, 1995) or
the Highest Bidder will lose the right to purchase the Block of
Shares and GSIS will instead offer the Block of Shares to the
other Qualified Bidders:
a. The Highest Bidder must negotiate and execute with the
GSIS/MHC the Management Contract, International
Marketing/Reservation System Contract or other type of

contract specified by the Highest Bidder in its strategic plan for

the Manila Hotel x x x x
b. The Highest Bidder must execute the Stock Purchase and
Sale Agreement with GSIS x x x x
K. DECLARATION OF THE WINNING
BIDDER/STRATEGIC PARTNER The Highest Bidder will be declared the Winning
Bidder/Strategic Partner after the following conditions are met:
a. Execution of the necessary contracts with GSIS/MHC not
later than October 23, 1995 (reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP
(Committee on Privatization)/ OGCC (Office of the Government
Corporate Counsel) are obtained.[3]
Pending the declaration of Renong Berhard as the
winning bidder/strategic partner and the execution of the
necessary contracts, petitioner in a letter to respondent
GSIS dated 28 September 1995 matched the bid price
of P44.00 per share tendered by Renong Berhad.[4] In a
subsequent letter dated 10 October 1995 petitioner sent a
managers check issued by Philtrust Bank for Thirty-three
Million Pesos (P33,000,000.00) as Bid Security to match
the bid of the Malaysian Group, Messrs. Renong Berhad x
x x x[5] which respondent GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that
respondent GSIS has disregarded the tender of the
matching bid and that the sale of 51% of the MHC may be

hastened by respondent GSIS and consummated with

Renong Berhad, petitioner came to this Court on
prohibition and mandamus. On 18 October 1995 the
Court issued a temporary restraining order enjoining
respondents from perfecting and consummating the sale
to the Malaysian firm.
On 10 September 1996 the instant case was accepted
by the Court En Banc after it was referred to it by the First
Division. The case was then set for oral arguments with
former Chief Justice Enrique M. Fernando and Fr. Joaquin
G. Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art.
XII, of the 1987 Constitution and submits that the Manila
Hotel has been identified with the Filipino nation and has
practically become a historical monument which reflects
the vibrancy of Philippine heritage and culture. It is a
proud legacy of an earlier generation of Filipinos who
believed in the nobility and sacredness of independence
and its power and capacity to release the full potential of
the Filipino people. To all intents and purposes, it has
become a part of the national patrimony.[6] Petitioner also
argues that since 51% of the shares of the MHC carries
with it the ownership of the business of the hotel which is
owned by respondent GSIS, a government-owned and
controlled corporation, the hotel business of respondent
GSIS being a part of the tourism industry is
unquestionably a part of the national economy. Thus, any
transaction involving 51% of the shares of stock of the
MHC is clearly covered by the term national economy, to

which Sec. 10, second par., Art. XII, 1987 Constitution,

applies.[7]
It is also the thesis of petitioner that since Manila Hotel
is part of the national patrimony and its business also
unquestionably part of the national economy petitioner
should be preferred after it has matched the bid offer of
the Malaysian firm. For the bidding rules mandate that if
for any reason, the Highest Bidder cannot be awarded the
Block of Shares, GSIS may offer this to the other Qualified
Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest
bid in terms of price per share.[8]
Respondents except. They maintain that: First, Sec.
10, second par., Art. XII, of the 1987 Constitution is merely
a statement of principle and policy since it is not a selfexecuting provision and requires implementing
legislation(s) x x x x Thus, for the said provision to
operate, there must be existing laws to lay down
conditions under which business may be done.[9]
Second, granting that this provision is self-executing,
Manila Hotel does not fall under the term national
patrimony which only refers to lands of the public domain,
waters, minerals, coal, petroleum and other mineral oils,
all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna and all marine wealth in its
territorial sea, and exclusive marine zone as cited in the
first and second paragraphs of Sec. 2, Art. XII, 1987
Constitution. According to respondents, while petitioner
speaks of the guests who have slept in the hotel and the
events that have transpired therein which make the hotel

historic, these alone do not make the hotel fall under

the patrimony of the nation. What is more, the mandate of
the Constitution is addressed to the State, not to
respondent GSIS which possesses a personality of its own
separate and distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of
the national patrimony, the constitutional provision invoked
is still inapplicable since what is being sold is only 51% of
the outstanding shares of the corporation, not the hotel
building nor the land upon which the building
stands. Certainly, 51% of the equity of the MHC cannot be
considered part of the national patrimony. Moreover, if the
disposition of the shares of the MHC is really contrary to
the Constitution, petitioner should have questioned it right
from the beginning and not after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J.
1., of the bidding rules which provides that if for any
reason, the Highest Bidder cannot be awarded the Block
of Shares, GSIS may offer this to the other Qualified
Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest
bid
in
terms
of
price
per
share,
is
misplaced. Respondents postulate that the privilege of
submitting a matching bid has not yet arisen since it only
takes place if for any reason, the Highest Bidder cannot
be awarded the Block of Shares. Thus the submission by
petitioner of a matching bid is premature since Renong
Berhad could still very well be awarded the block of shares
and the condition giving rise to the exercise of the privilege
to submit a matching bid had not yet taken place.

Finally, the prayer for prohibition grounded on grave

abuse of discretion should fail since respondent GSIS did
not exercise its discretion in a capricious, whimsical
manner, and if ever it did abuse its discretion it was not so
patent and gross as to amount to an evasion of a positive
duty or a virtual refusal to perform a duty enjoined by
law. Similarly, the petition for mandamus should fail as
petitioner has no clear legal right to what it demands and
respondents do not have an imperative duty to perform the
act required of them by petitioner.
We now resolve. A constitution is a system of
fundamental
laws
for
the
governance
and
administration of a nation. It is supreme, imperious,
absolute and unalterable except by the authority from
which it emanates. It has been defined as the
fundamental and paramount law of the nation.[10] It
prescribes the permanent framework of a system of
government, assigns to the different departments their
respective powers and duties, and establishes certain
fixed principles on which government is founded. The
fundamental conception in other words is that it is a
supreme law to which all other laws must conform and in
accordance with which all private rights must be
determined and all public authority administered.[11] Under
the doctrine of constitutional supremacy, if a law or
contract violates any norm of the constitution that law or
contract whether promulgated by the legislative or by the
executive branch or entered into by private persons for
private purposes is null and void and without any force
and effect. Thus, since the Constitution is the

fundamental, paramount and supreme law of the nation, it

is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations
of policies and principles. Their provisions command the
legislature to enact laws and carry out the purposes of the
framers who merely establish an outline of government
providing for the different departments of the governmental
machinery and securing certain fundamental and
inalienable rights of citizens.[12] A provision which lays
down a general principle, such as those found in Art. II of
the 1987 Constitution, is usually not self-executing. But a
provision which is complete in itself and becomes
operative without the aid of supplementary or
enabling legislation, or that which supplies sufficient
rule by means of which the right it grants may be
enjoyed or protected, is self-executing. Thus a
constitutional provision is self-executing if the nature
and extent of the right conferred and the liability
imposed are fixed by the constitution itself, so that
they can be determined by an examination and
construction of its terms, and there is no language
indicating that the subject is referred to the legislature
for action.[13]
As against constitutions of the past, modern
constitutions have been generally drafted upon a different
principle and have often become in effect extensive codes
of laws intended to operate directly upon the people in a
manner similar to that of statutory enactments, and the
function of constitutional conventions has evolved into one
more like that of a legislative body. Hence, unless it is

expressly provided that a legislative act is necessary to

enforce a constitutional mandate, the presumption now is
that all provisions of the constitution are self-executing. If
the constitutional provisions are treated as requiring
legislation instead of self-executing, the legislature would
have the power to ignore and practically nullify the
mandate of the fundamental law.[14] This can be
cataclysmic. That is why the prevailing view is, as it has
always been, that x x x x in case of doubt, the Constitution should be considered
self-executing rather than non-self-executing x x x x Unless the
contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would
give the legislature discretion to determine when, or whether,
they shall be effective. These provisions would be subordinated
to the will of the lawmaking body, which could make them
entirely meaningless by simply refusing to pass the needed
implementing statute.[15]
Respondents argue that Sec. 10, second par., Art. XII,
of the 1987 Constitution is clearly not self-executing, as
they quote from discussions on the floor of the 1986
Constitutional Commission MR. RODRIGO. Madam President, I am asking this
question as the Chairman of the Committee on
Style. If the wording of PREFERENCE is given
to QUALIFIED FILIPINOS, can it be understood
as a preference to qualified Filipinos vis-avis Filipinos who are not qualified. So, why do we

not make it clear? To qualified Filipinos as against

aliens?
THE PRESIDENT. What is the question of
Commissioner Rodrigo? Is it to remove the word
QUALIFIED?
MR. RODRIGO. No, no, but say definitely TO
QUALIFIED FILIPINOS as against whom? As
against aliens or over aliens ?
MR. NOLLEDO. Madam President, I think that is
understood. We use the word QUALIFIED
because the existing laws or prospective laws will
always lay down conditions under which business
may be done. For example, qualifications on
capital, qualifications on the setting up of other
financial
structures, et
cetera (underscoring
supplied by respondents).
MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes.[16]
Quite apparently, Sec. 10, second par., of Art XII is
couched in such a way as not to make it appear that it is
non-self-executing but simply for purposes of style. But,
certainly, the legislature is not precluded from enacting
further laws to enforce the constitutional provision so long
as the contemplated statute squares with the
Constitution. Minor details may be left to the legislature
without impairing the self-executing nature of constitutional
provisions.

In self-executing constitutional provisions, the

legislature may still enact legislation to facilitate the
exercise of powers directly granted by the constitution,
further the operation of such a provision, prescribe a
practice to be used for its enforcement, provide a
convenient remedy for the protection of the rights secured
or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere
fact that legislation may supplement and add to or
prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision
ineffective in the absence of such legislation. The
omission from a constitution of any express provision for a
remedy for enforcing a right or liability is not necessarily
an indication that it was not intended to be selfexecuting. 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 selfexecuting and only placed in the Constitution as moral
incentives to legislation, not as judicially enforceable rights
- are simply not in point. Basco v. Philippine Amusements
and Gaming Corporation[20] speaks of constitutional
provisions on personal dignity,[21] the sanctity of family life,
[22]
the vital role of the youth in nation-building,[23] the
promotion of social justice,[24] and the values of education.
[25]
Tolentino v. Secretary of Finance[26] refers to
constitutional provisions on social justice and human
rights[27] and on education.[28] Lastly, Kilosbayan, Inc. v.
Morato[29] cites provisions on the promotion of general
welfare,[30] the sanctity of family life,[31] the vital role of the
youth in nation-building[32] and the promotion of total
human liberation and development.[33] A reading of these
provisions indeed clearly shows that they are not judicially
enforceable constitutional rights but merely guidelines for

legislation. The very terms of the provisions manifest that

they are only principles upon which legislations must be
based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the
1987 Constitution is a mandatory, positive command which
is complete in itself and which needs no further guidelines
or implementing laws or rules for its enforcement. From
its very words the provision does not require any
legislation to put it in operation. It is per se judicially
enforceable. When our Constitution mandates that [i]n the
grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give
preference to qualified Filipinos, it means just that qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified
circumstances an action may be maintained to enforce
such right notwithstanding the absence of any legislation
on the subject; consequently, if there is no statute
especially enacted to enforce such constitutional right,
such right enforces itself by its own inherent potency and
puissance, and from which all legislations must take their
bearings. Where there is a right there is a remedy. Ubi
jus ibi remedium.
As regards our national patrimony, a member of the
1986 Constitutional Commission[34] explains The patrimony of the Nation that should be conserved
and developed refers not only to our rich natural resources
but also to the cultural heritage of our race. It also refers
to our intelligence in arts, sciences and letters. Therefore,

we should develop not only our lands, forests, mines and

other natural resources but also the mental ability or
faculty of our people.
We agree. In its plain and ordinary meaning, the
term patrimony pertains
to
heritage.[35] When
the
Constitution speaks of national patrimony, it refers not only
to the natural resources of the Philippines, as the
Constitution could have very well used the term natural
resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark - a living
testimonial of Philippine heritage. While it was restrictively
an American hotel when it first opened in 1912, it
immediately evolved to be truly Filipino. Formerly a
concourse for the elite, it has since then become the
venue of various significant events which have shaped
Philippine history. It was called the Cultural Center of the
1930s. It was the site of the festivities during the
inauguration of the Philippine Commonwealth. Dubbed as
the Official Guest House of the Philippine Government it
plays host to dignitaries and official visitors who are
accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the
book The Manila Hotel: The Heart and Memory of a City.
[37]
During World War II the hotel was converted by the
Japanese Military Administration into a military
headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese
together with Intramuros as the two (2) places for their
final stand. Thereafter, in the 1950s and 1960s, 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 failedcoup d etat where an aspirant for vicepresident 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
recognized.

Davide

is

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.
xxxx
MR. MONSOD. Madam President, apparently the
proponent is agreeable, but we have to raise a
question. Suppose it is a corporation that is 80percent 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
President.

least

60

percent,

Madam

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]
xxxx
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
explained thus -

to

qualified

Filipinos was

MR. FOZ. Madam President, I would like to request

Commissioner Nolledo to please restate his
amendment so that I can ask a question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS COVERING
THE NATIONAL ECONOMY AND PATRIMONY,
THE STATE SHALL GIVE PREFERENCE TO
QUALIFIED FILIPINOS.
MR. FOZ. In connection with that amendment, if a
foreign enterprise is qualified and a Filipino

enterprise is also qualified, will the Filipino

enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some
aspects than the Filipino enterprise, will the
Filipino still be preferred?
MR. NOLLEDO. The answer is yes.
MR. FOZ. Thank you.[41]
Expounding further on the Filipino First Policy provision
Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of
MUST, it will be SHALL - THE STATE SHALL
GIVE
PREFERENCE
TO
QUALIFIED
FILIPINOS. This embodies the so-called Filipino
First policy. That means that Filipinos should be
given preference in the grant of concessions,
privileges and rights covering the national
patrimony.[42]
The exchange of views in the sessions of the
Constitutional Commission regarding the subject provision
was still further clarified by Commissioner Nolledo[43] Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino
bias in all economic concerns. It is better known as the
FILIPINO FIRST Policy x x x x This provision was never
found in previous Constitutions x x x x
The term qualified Filipinos simply means that preference
shall be given to those citizens who can make a viable

contribution to the common good, because of credible

competence and efficiency. It certainly does NOT mandate the
pampering and preferential treatment to Filipino citizens or
organizations that are incompetent or inefficient, since such an
indiscriminate preference would be counterproductive and
inimical to the common good.
In the granting of economic rights, privileges, and concessions,
when a choice has to be made between a qualified foreigner
and a qualified Filipino, the latter shall be chosen over the
former.
Lastly,
the
word qualified is
also
determinable. Petitioner
was
so
considered
by
respondent GSIS and selected as one of the qualified
bidders. It was pre-qualified by respondent GSIS in
accordance with its own guidelines so that the sole
inference here is that petitioner has been found to be
possessed of proven management expertise in the hotel
industry, or it has significant equity ownership in another
hotel company, or it has an overall management and
marketing proficiency to successfully operate the Manila
Hotel.[44]
The penchant to try to whittle away the mandate of the
Constitution by arguing that the subject provision is not
self-executory and requires implementing legislation is
quite disturbing. The attempt to violate a clear
constitutional provision - by the government itself - is only
too distressing. To adopt such a line of reasoning is to
renounce the duty to ensure faithfulness to the
Constitution. For, even some of the provisions of the

Constitution which evidently need implementing legislation

have juridical life of their own and can be the source of a
judicial remedy. We cannot simply afford the government
a defense that arises out of the failure to enact further
enabling, implementing or guiding legislation. In fine, the
discourse of Fr. Joaquin G. Bernas, S.J., on constitutional
government is apt The executive department has a constitutional duty to
implement laws, including the Constitution, even before
Congress acts - provided that there are discoverable legal
standards for executive action. When the executive acts, it must
be guided by its own understanding of the constitutional
command and of applicable laws. The responsibility for reading
and understanding the Constitution and the laws is not the sole
prerogative of Congress. If it were, the executive would have to
ask Congress, or perhaps the Court, for an interpretation every
time the executive is confronted by a constitutional
command. That is not how constitutional government operates.
[45]

Respondents further argue that the constitutional

provision is addressed to the State, not to respondent
GSIS which by itself possesses a separate and distinct
personality. This argument again is at best specious. It is
undisputed that the sale of 51% of the MHC could only be
carried out with the prior approval of the State acting
through respondent Committee on Privatization. As
correctly pointed out by Fr. Joaquin G. Bernas, S.J., this
fact alone makes the sale of the assets of respondents
GSIS and MHC a state action. In constitutional

jurisprudence, the acts of persons distinct from the

government are considered state action covered by the
Constitution (1) when the activity it engages in is a public
function; (2) when the government is so significantly
involved with the private actor as to make the government
responsible for his action; and, (3) when the government
has approved or authorized the action. It is evident that
the act of respondent GSIS in selling 51% of its share in
respondent MHC comes under the second and third
categories of state action. Without doubt therefore the
transaction, although entered into by respondent GSIS, is
in fact a transaction of the State and therefore subject to
the constitutional command.[46]
When the Constitution addresses the State it refers not
only to the people but also to the government as elements
of the State. After all, government is composed of three
(3) divisions of power - legislative, executive and
judicial. Accordingly, a constitutional mandate directed to
the State is correspondingly directed to the three (3)
branches of government. It is undeniable that in this case
the subject constitutional injunction is addressed among
others to the Executive Department and respondent GSIS,
a government instrumentality deriving its authority from the
State.
It should be stressed that while the Malaysian firm
offered the higher bid it is not yet the winning bidder. The
bidding rules expressly provide that the highest bidder
shall only be declared the winning bidder after it has
negotiated and executed the necessary contracts, and
secured the requisite approvals. Since the Filipino First

Policy provision of the Constitution bestows

preference on qualified Filipinos the mere tending of
the highest bid is not an assurance that the highest
bidder will be declared the winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are
they under obligation to enter into one with the highest
bidder. For in choosing the awardee respondents are
mandated to abide by the dictates of the 1987 Constitution
the provisions of which are presumed to be known to all
the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy,
the subject constitutional provision is, as it should be,
impliedly written in the bidding rules issued by respondent
GSIS, lest the bidding rules be nullified for being violative
of the Constitution. It is a basic principle in constitutional
law that all laws and contracts must conform with the
fundamental law of the land. Those which violate the
Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f
for any reason the Highest Bidder cannot be awarded the
Block of Shares, GSIS may offer this to other Qualified
Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest
bid in terms of price per share.[47] Certainly, the
constitutional mandate itself is reason enough not to
award the block of shares immediately to the foreign
bidder notwithstanding its submission of a higher, or even
the highest, bid. In fact, we cannot conceive of
a strongerreason 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 petitioners
matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the
constitutional safeguard unless perhaps the award has
been finally made. To insist on selling the Manila Hotel to
foreigners when there is a Filipino group willing to match
the bid of the foreign group is to insist that government be
treated as any other ordinary market player, and bound by
its mistakes or gross errors of judgment, regardless of the
consequences
to
the
Filipino
people. The
miscomprehension of the Constitution is regrettable. Thus
we would rather remedy the indiscretion while there is still
an opportunity to do so than let the government develop
the habit of forgetting that the Constitution lays down the
basic conditions and parameters for its actions.
Since petitioner has already matched the bid price
tendered by Renong Berhad pursuant to the bidding rules,
respondent GSIS is left with no alternative but to award to
petitioner the block of shares of MHC and to execute the
necessary agreements and documents to effect the sale in
accordance not only with the bidding guidelines and

procedures but with the Constitution as well. The refusal

of respondent GSIS to execute the corresponding
documents with petitioner as provided in the bidding rules
after the latter has matched the bid of the Malaysian firm
clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine
nationalism. It is embodied in the 1987 Constitution not
merely to be used as a guideline for future legislation but
primarily to be enforced; so must it be enforced. This
Court as the ultimate guardian of the Constitution will
never shun, under any reasonable circumstance, the duty
of upholding the majesty of the Constitution which it is
tasked to defend. It is worth emphasizing that it is not the
intention of this Court to impede and diminish, much less
undermine, the influx of foreign investments. Far from it,
the Court encourages and welcomes more business
opportunities but avowedly sanctions the preference for
Filipinos whenever such preference is ordained by the
Constitution. The position of the Court on this matter
could have not been more appropriately articulated by
Chief Justice Narvasa As scrupulously as it has tried to observe that it is not its
function to substitute its judgment for that of the legislature or
the executive about the wisdom and feasibility of legislation
economic in nature, the Supreme Court has not been spared
criticism for decisions perceived as obstacles to economic
progress and development x x x x in connection with a
temporary injunction issued by the Courts First Division against
the sale of the Manila Hotel to a Malaysian Firm and its partner,
certain statements were published in a major daily to the effect

that that injunction again demonstrates that the Philippine legal

system can be a major obstacle to doing business here.
Let it be stated for the record once again that while it is no
business of the Court to intervene in contracts of the kind
referred to or set itself up as the judge of whether they are viable
or attainable, it is its bounden duty to make sure that they do not
violate the Constitution or the laws, or are not adopted or
implemented with grave abuse of discretion amounting to lack
or excess of jurisdiction. It will never shirk that duty, no matter
how buffeted by winds of unfair and ill-informed criticism.[48]
Privatization of a business asset for purposes of
enhancing its business viability and preventing further
losses, regardless of the character of the asset, should not
take precedence over non-material values. A commercial,
nay even a budgetary, objective should not be pursued at
the expense of national pride and dignity. For the
Constitution enshrines higher and nobler non-material
values. Indeed, the Court will always defer to the
Constitution in the proper governance of a free society;
after all, there is nothing so sacrosanct in any economic
policy as to draw itself beyond judicial review when the
Constitution is involved.[49]
Nationalism is inherent in the very concept of the
Philippines being a democratic and republican state, with
sovereignty residing in the Filipino people and from whom
all government authority emanates. In nationalism, the
happiness and welfare of the people must be the
goal. The nation-state can have no higher purpose. Any
interpretation of any constitutional provision must adhere

to such basic concept. Protection of foreign investments,

while laudible, is merely a policy. It cannot override the
demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is
not just any commodity to be sold to the highest bidder
solely for the sake of privatization. We are not talking
about an ordinary piece of property in a commercial
district. We are talking about a historic relic that has
hosted many of the most important events in the short
history of the Philippines as a nation. We are talking about
a hotel where heads of states would prefer to be housed
as a strong manifestation of their desire to cloak the
dignity of the highest state function to their official visits to
the Philippines. Thus the Manila Hotel has played and
continues to play a significant role as an authentic
repository of twentieth century Philippine history and
culture. In this sense, it has become truly a reflection of
the Filipino soul - a place with a history of grandeur; a
most historical setting that has played a part in the
shaping of a country.[51]
This Court cannot extract rhyme nor reason from the
determined efforts of respondents to sell the historical
landmark - this Grand Old Dameof 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 nations soul for some
pieces of foreign silver. And so we ask: What advantage,
which cannot be equally drawn from a qualified Filipino,
can be gained by the Filipinos if Manila Hotel - and all that

it stands for - is sold to a non-Filipino? How much of

national pride will vanish if the nations cultural heritage is
entrusted to a foreign entity? On the other hand, how
much dignity will be preserved and realized if the national
patrimony is safekept in the hands of a qualified, zealous
and well-meaning Filipino? This is the plain and simple
meaning of the Filipino First Policy provision of the
Philippine Constitution. And this Court, heeding the
clarion call of the Constitution and accepting the duty of
being the elderly watchman of the nation, will continue to
respect and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE
INSURANCE
SYSTEM,
MANILA
HOTEL
CORPORATION, COMMITTEE ON PRIVATIZATION and
OFFICE OF THE GOVERNMENT CORPORATE
COUNSEL are directed to CEASE and DESIST from
selling 51% of the shares of the Manila Hotel Corporation
to RENONG BERHAD, and to ACCEPT the matching bid
of petitioner MANILA PRINCE HOTEL CORPORATION to
purchase the subject 51% of the shares of the Manila
Hotel Corporation at P44.00 per share and thereafter to
execute the necessary agreements and documents to
effect the sale, to issue the necessary clearances and to
do such other acts and deeds as may be necessary for the
purpose.
SO ORDERED.
Regalado,
Davide,
Jr.,
Romero,
Francisco, and Hermosisima, Jr., JJ, concur.
Narvasa,
C.J.,
(Chairman), and
J., joins J. Puno in his dissent.

Kapunan,
Melo,

FACTS:
Petitioner:
Manila Prince Hotel Corporation, a Filipino corporation,
Respondents:
GOVERNMENT SERVICE INSURANCE SYSTEM,
MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION
and
OFFICE
OF
THE
GOVERNMENT
CORPORATE
COUNSEL, respondents.
Renong Berhad, a Malaysian-one of the bidder
(highest)
There are a conditions to done before the award until
october 23, 1995 extended to November 3, 1995.
If not complied be awarded to the next higher bidder.
petitioner in a letter to respondent GSIS dated 28
September 1995 matched the bid price of P44.00 per
share tendered by Renong Berhad
In a subsequent letter dated 10 October 1995 petitioner
sent a managers check issued by Philtrust Bank for
Thirty-three Million Pesos (P33,000,000.00) as Bid
Security to match the bid of the Malaysian Group, Messrs.
Renong Berhad x x x x[5] which respondent GSIS refused
to accept.

MPH File a petition

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
Manila Hotel is part of the national patrimony and its
business also unquestionably part of the national economy
petitioner should be preferred
RESPONDENTS CONTENTION:
First, Sec. 10, second par., Art. XII, of the 1987
Constitution is merely a statement of principle and policy
since it is not a self-executing provision and requires
implementing legislation(s) x x x x Thus, for the said
provision to operate, there must be existing laws to lay
down conditions under which business may be done.[9]
Second, granting that this provision is self-executing,
Manila Hotel does not fall under the term national
patrimony which only refers to lands of the public domain,
waters, minerals, coal, petroleum and other mineral oils,
all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna and all marine wealth in its
territorial sea, and exclusive marine zone as cited in the

first and second paragraphs of Sec. 2, Art. XII, 1987

Constitution. According to respondents, while petitioner
speaks of the guests who have slept in the hotel and the
events that have transpired therein which make the hotel
historic, these alone do not make the hotel fall under
the patrimony of the nation. What is more, the mandate of
the Constitution is addressed to the State, not to
respondent GSIS which possesses a personality of its own
separate and distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of
the national patrimony, the constitutional provision invoked
is still inapplicable since what is being sold is only 51% of
the outstanding shares of the corporation, not the hotel
building nor the land upon which the building
stands. Certainly, 51% of the equity of the MHC cannot be
considered part of the national patrimony. Moreover, if the
disposition of the shares of the MHC is really contrary to
the Constitution, petitioner should have questioned it right
from the beginning and not after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J.
1., of the bidding rules which provides that if for any
reason, the Highest Bidder cannot be awarded the Block
of Shares, GSIS may offer this to the other Qualified
Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest
bid
in
terms
of
price
per
share,
is
misplaced. Respondents postulate that the privilege of
submitting a matching bid has not yet arisen since it only
takes place if for any reason, the Highest Bidder cannot
be awarded the Block of Shares. Thus the submission by

petitioner of a matching bid is premature since Renong

Berhad could still very well be awarded the block of shares
and the condition giving rise to the exercise of the privilege
to submit a matching bid had not yet taken place.
Finally, the prayer for prohibition grounded on grave
abuse of discretion should fail since respondent GSIS did
not exercise its discretion in a capricious, whimsical
manner, and if ever it did abuse its discretion it was not so
patent and gross as to amount to an evasion of a positive
duty or a virtual refusal to perform a duty enjoined by
law. Similarly, the petition for mandamus should fail as
petitioner has no clear legal right to what it demands and
respondents do not have an imperative duty to perform the
act required of them by petitioner.

RULINGs:
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]
x x x x in case of doubt, the Constitution should be considered
self-executing rather than non-self-executing x x x x Unless the
contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would
give the legislature discretion to determine when, or whether,
they shall be effective.
In self-executing constitutional provisions, the legislature
may still enact legislation to facilitate the exercise of
powers directly granted by the constitution
On the other hand, Sec. 10, second par., Art. XII of the
1987 Constitution is a mandatory, positive command which
is complete in itself and which needs no further guidelines
or implementing laws or rules for its enforcement. From
its very words the provision does not require any
legislation to put it in operation. It is per se judicially
enforceable. When our Constitution mandates that [i]n the
grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give
preference to qualified Filipinos, it means just that qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified
circumstances an action may be maintained to enforce
such right notwithstanding the absence of any legislation
on the subject; consequently, if there is no statute
especially enacted to enforce such constitutional right,
such right enforces itself by its own inherent potency and

puissance, and from which all legislations must take their

bearings. Where there is a right there is a remedy. Ubi
jus ibi remedium.
As regards our national patrimony, a member of the
1986 Constitutional Commission[34] explains The patrimony of the Nation that should be conserved
and developed refers not only to our rich natural resources
but also to the cultural heritage of our race. It also refers
to our intelligence in arts, sciences and letters. Therefore,
we should develop not only our lands, forests, mines and
other natural resources but also the mental ability or
faculty of our people.
We agree. In its plain and ordinary meaning, the
term patrimony pertains to heritage.[35] When the
Constitution speaks of national patrimony, it refers not only
to the natural resources of the Philippines, as the
Constitution could have very well used the term natural
resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark - a living
testimonial of Philippine heritage. While it was restrictively
an American hotel when it first opened in 1912, it
immediately evolved to be truly Filipino. Formerly a
concourse for the elite, it has since then become the
venue of various significant events which have shaped
Philippine history. It was called the Cultural Center of the
1930s. It was the site of the festivities during the
inauguration of the Philippine Commonwealth. Dubbed as
the Official Guest House of the Philippine Government it

plays host to dignitaries and official visitors who are

accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the
book The Manila Hotel: The Heart and Memory of a City.
[37]
During World War II the hotel was converted by the
Japanese Military Administration into a military
headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese
together with Intramuros as the two (2) places for their
final stand. Thereafter, in the 1950s and 1960s, 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 failedcoup d etat where an aspirant for vicepresident 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

Verily,
Hotel has
nationhood.

Manila
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.