SEC 10 ARTICLE 12

FILIPINO FIRST POLICY- SELF EXECUTING LAW

E.E.M.DELACRUZ

III. THE RULING

1. Manila Prince Hotel v. GSIS,

[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

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

DECISION
(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.

SEC 10 ARTICLE 12

FILIPINO FIRST POLICY- SELF EXECUTING LAW

E.E.M.DELACRUZ

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.

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.

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.

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.

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

2. YES, the controlling shares of the Manila Hotel Corporation form part of our
patrimony as a nation.

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

SEC 10 ARTICLE 12

E.E.M.DELACRUZ

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.

FILIPINO FIRST POLICY- SELF EXECUTING LAW

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.