Background

The case revolves around the privatization of the Manila Hotel, a historic landmark and cultural icon in the Philippines. GSIS, as the owner, initiated a bidding process to sell 51% of the shares in MHC. The bidding attracted both local and foreign investors, with a Malaysian firm emerging as the highest bidder. The petitioner, a Filipino corporation, sought to invoke the "Filipino First" policy enshrined in the Constitution to match the winning bid and acquire the shares.

Facts

• 1. GSIS, a government-owned corporation, sought to sell 51% of its shares in MHC through public bidding.
• 2. Petitioner Manila Prince Hotel and Malaysian firm Renong Berhad participated in the bidding.
• 3. Renong Berhad won with a bid of P44 per share, while petitioner bid P41 per share.
• 4. Petitioner offered to match the winning bid, citing the constitutional preference for Filipino citizens.
• 5. GSIS refused to entertain petitioner's offer.

Arguments of the Petitioners

• 1. The constitutional provision giving preference to qualified Filipinos is self-executing and requires no enabling legislation.
• 2. The Manila Hotel is part of the national patrimony and economy, thus falling under the constitutional provision.
• 3. GSIS, as a government instrumentality, is bound by the constitutional mandate to give preference to qualified Filipinos.
• 4. Petitioner should be allowed to match the highest bid as a form of preference to a qualified Filipino entity.

Arguments of the Respondents

• 1. The constitutional provision is not self-executing and requires implementing legislation.
• 2. The Manila Hotel does not fall under the definition of national patrimony.
• 3. GSIS has a separate juridical personality distinct from the government and is not covered by the constitutional provision.
• 4. The bidding rules do not provide for a right to match the highest bid.
• 5. Petitioner is estopped from questioning the sale after participating in the bidding process.

Issues

• 1. Is the constitutional provision on giving preference to qualified Filipinos self-executing?
• 2. Does the sale of Manila Hotel shares fall under the scope of "national economy and patrimony"?
• 3. Is GSIS, as a government-owned corporation, bound by the constitutional provision?
• 4. Should the petitioner be allowed to match the highest bid as a form of preference?

Ruling

• 1. The Court ruled that the constitutional provision is self-executing and requires no enabling legislation.
• 2. The Manila Hotel is considered part of the national patrimony due to its historical and cultural significance.
• 3. GSIS, as a government instrumentality, is bound by the constitutional mandate.
• 4. The petitioner should be allowed to match the highest bid as a form of preference to a qualified Filipino entity.

Doctrines

• 1. Constitutional Supremacy: The Constitution is the fundamental law of the land, and all laws and contracts must conform to it.
• 2. Self-Executing Constitutional Provisions: Constitutional provisions are presumed self-executing unless expressly stated otherwise or when they need implementing legislation.
• 3. Filipino First Policy: In matters involving national economy and patrimony, qualified Filipinos should be given preference.
• 4. National Patrimony: This includes not only natural resources but also cultural heritage and historically significant properties.

Key Excerpts

• 1. "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."
• 2. "The Constitution is a product of our collective history, and its interpretation must take into account the realities of the present and the goals of the future."
• 3. "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."
• 4. "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."
• 5. "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."

Precedents Cited

• 1. Ichong v. Hernandez (1957): Cited to support the constitutionality of laws giving preference to Filipino citizens in certain economic activities.
• 2. Basco v. Philippine Amusements and Gaming Corporation (1991): Distinguished from the present case to show that certain constitutional provisions are self-executing while others are not.
• 3. Co Chiong v. Cuaderno (1949): Used to illustrate how preference for Filipino citizens has been applied in previous cases.

Statutory and Constitutional Provisions

• 1. Article XII (National Economy and Patrimony), Section 10 - This is the primary constitutional provision discussed in the case. The relevant part states: "In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos."
• 2. Article II (Declaration of Principles and State Policies), Section 19 - Cited to support the Filipino First policy: "The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos."
• 3. Article XIV (Education, Science and Technology, Arts, Culture, and Sports), Section 4 - While not directly quoted in the main decision, this was referenced in discussions about cultural heritage: "The State shall foster the preservation, enrichment, and dynamic evolution of a Filipino national culture based on the principle of unity in diversity in a climate of free artistic and intellectual expression."
• 4. Article II (Declaration of Principles and State Policies), Section 17 - Mentioned in relation to the promotion of nationalism: "The State shall give priority to education, science and technology, arts, culture, and sports to foster patriotism and nationalism, accelerate social progress, and promote total human liberation and development."
• 5. Article IX-B (The Civil Service Commission), Section 2(1) - Cited to establish GSIS as part of the government: "The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters."
• 6. Article IX-D (The Commission on Audit), Section 2(1) - Also cited to establish GSIS as part of the government: "The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters..."