D E C I S
I O N
(En Banc)
BELLOSILLO, J.:
I.
THE FACTS
Pursuant
to the privatization program of the Philippine Government, the GSIS sold in
public auction its stake in Manila Hotel Corporation (MHC). Only 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.
Petitioner filed a petition before the
Supreme Court to compel the GSIS to allow it to match the bid of Renong Berhad.
It invoked the Filipino First Policy enshrined
in §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.”
II.
THE ISSUES
1. Whether
§10, paragraph 2, Article XII of the 1987 Constitution is a self-executing
provision and does not need implementing legislation to carry it into effect;
2. Assuming
§10, paragraph 2, Article XII is self-executing, whether the controlling shares
of the Manila Hotel Corporation form part of our patrimony as a nation;
3.
Whether
GSIS is included in the term “State,” hence, mandated to implement §10,
paragraph 2, Article XII of the Constitution; and
4. Assuming
GSIS is part of the State, whether it should give preference to the petitioner,
a Filipino corporation, over Renong Berhad, a foreign corporation, in the sale
of the controlling shares of the Manila Hotel Corporation.
III. THE RULING
[The
Court, voting 11-4, DISMISSED the
petition.]
1.
YES, §10, paragraph 2, Article XII of the
1987 Constitution is a self-executing provision and does not need implementing legislation
to carry it into effect.
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.
xxx xxx xxx
Respondents . . . 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. 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.
xxx.
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.
2.
YES, the controlling shares of the Manila
Hotel Corporation form part of our patrimony as a nation.
In its plain
and ordinary meaning, the
term patrimony pertains to heritage. 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.
xxx xxx xxx
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.
3.
YES, GSIS is included in the term “State,”
hence, it is mandated to implement §10, paragraph 2, Article XII of the
Constitution.
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. [T]his 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.
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.
4.
YES, GSIS should give preference to the
petitioner in the sale of the controlling shares of the Manila Hotel
Corporation.
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.
xxx xxx xxx
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. 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.
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