MNB Case Digest: Manila Prince Hotel vs. Government Service Insurance System (GSIS)

Manila Prince Hotel vs. Government Service Insurance System (GSIS)

FACTS:

The controversy arose when respondent Government Service Insurance System (GSIS) to sell 30% to 51% of the issued and outstanding shares of respondent Manila Hotel Corporation through public bidding as part of the Philippine government's privatization initiative under Proclamation No. 50.

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.

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.

The GSIS declared Renong Berhad the highest bidder and immediately returned petitioner's bid security.

Petitioner matched Renong Berhad's bid price of P44.00 per share.

Because of the refusal by the respondent, petitioner came to the Supreme Court on prohibition and mandamus. The SC issued a TRO enjoining respondents from consummating and perfecting the said sale.

The petitioner argued that based on Sec. 10, second par., Art. XII, of the 1987 Constitution:

1. Manila Hotel had become part of the national patrimony, having become a historical monument for the Filipino nation; and

2. Because respondent GSIS, a GOCC, owns 51 percent of the corporation’s shares, the hotel business of GSIS, which is part of the tourism industry, is unquestionably a part of the national economy. Hence, the petitioner claimed that the corporation is clearly covered by the term national economy under the contemplation of Sec. 10, second par., Art. XII, 1987 Constitution. 

The respondent, GSIS, argued that:

1. 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

2. While the hotel is indeed historic, Manila Hotel does not fall under the term national patrimony

3. But even if it is, 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

4. 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.

Issue: 

Whether or not the provisions of the Constitution, particularly Article XII Section 10, are self-executing.

HELD:

YES. The Supreme Court En Banc ruled that the provisions of the Constitution, particularly Art. 12, Sec 10, are self-executing. 

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 by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental and supreme law of the nation, it is deemed written in every statute and contract. 

While the Article 12, Sec. 10 (2) may be couched in such a way as not to make it appear that it is non-self-executing, the legislature is not precluded from enacting other further laws to enforce the constitutional provision so long as it is consistent with the Constitution. The SC remarked that Article 12, Sec. 10 (2) is a mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement.

Nota Bene:

1987 Constitution

Article 12, Sec. 10: The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

DETAILS:

Subject: Political Law Case Digest

Supreme Court En Banc? YES.

Date: February 3, 1997

G.R. No. 122156

267 SCRA 408

Where there Separate Opinions? Yes. 

Dissenting opinions: 2

Concurring opinions: 6

Link to Full Case: LAWPHIL