01.1 Case Digest MPH Vs GSIS

MANILA PRINCE HOTEL, Petitioner,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL

CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, Respondents.
G.R. No. 122156. February 3, 1997
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ., concur.
Manila Prince hotel filed a case for its bid to acquire the 51% of the shares of the Manial Hotel
Corporation (MHC) on the ground of the First Filipino Policy stated in Art. 10 paragraph 2,
Article XII of the 1987 Constitution, which provides that “in the grant of rights, privileges, and
concessions covering the national economy and patrimony, the State shall give preference to
qualified Filipinos.”
Facts:
 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.
 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.
Arguments:
MANILA PRINCE HOTEL, Petitioner, GOVERNMENT SERVICE INSURANCE

SYSTEM, MANILA HOTEL
CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE
COUNSEL, Respondents.
petitioner invokes Sec. 10, second par., Art. They maintain that: First, Sec. 10, second
XII, of the 1987 Constitution and submits that par., Art. XII, of the 1987 Constitution is
the Manila Hotel has been identified with the merely a statement of principle and policy
Filipino nation and has practically become a since it is not a self-executing provision and
historical monument which reflects the requires implementing legislation
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
Petitioner also argues that since 51% of the Second, granting that this provision is self-
shares of the MHC carries with it the executing, Manila Hotel does not fall under
ownership of the business of the hotel which the term national patrimony
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
petitioner should be preferred after it has Third, granting that the Manila Hotel forms
matched the bid offer of the Malaysian firm. part of the national patrimony, the
For the bidding rules mandate that if for any constitutional provision invoked is still
reason, the Highest Bidder cannot be awarded inapplicable since what is being sold is only
the Block of Shares, GSIS may offer this to 51% of the outstanding shares of the
the other Qualified Bidders that have validly corporation, not the hotel building nor the
submitted bids provided that these Qualified land upon which the building stands;
Bidders are willing to match the highest bid in
terms of price per share
The refusal of respondent GSIS to execute the the reliance by petitioner on par. V., subpar. J.
corresponding documents with petitioner as 1, of the bidding rules which provides that if
provided in the bidding rules after the latter for any reason, the Highest Bidder cannot be
has matched the bid of the Malaysian firm awarded the Block of Shares, GSIS may offer
clearly constitutes grave abuse of discretion 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
the prayer for prohibition grounded on grave
abuse of discretion should fail
Ruling:
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.
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ., concur.
Doctrine of the Case:
1. 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. 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. 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.
2. 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.
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.
3. This fact alone makes the sale of the assets of respondents GSIS and MHC a "state
action." 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.When the Constitution addresses the State it refers not only to the
people but also to the government as elements of the State.
4. It is a basic principle in constitutional law that all laws and contracts must conform
with the fundamental law of the land. 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.
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.
5. 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

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MANILA PRINCE HOTEL, Petitioner,

GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL

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

 Government Service Insurance System (GSIS), pursuant to the privatization program of

MANILA PRINCE HOTEL, Petitioner, GOVERNMENT SERVICE INSURANCE

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM,

Doctrine of the Case:

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