38 - Manila Prince Hotel Vs Gsis

MANILA PRINCE HOTEL VS.
GOVERNMENT SERVICE INSURANCE SYSTEM

[G.R. No. 122156. February 3, 1997]
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 Manila Hotel Corporation.
 The winning bidder, 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.
 In a close bidding held on 18 September 1995 only two (2) bidders participated:
1.Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC or
15,300,000 shares atP41.58 per share; and
2.RenongBerhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of
shares at P44.00 per share
 Pending the declaration of RenongBerhard as the winning bidder/strategic partner and the execution of the
necessary contracts, Manila Prince Hotel in a letter to respondent GSIS, matched the bid price of P44.00 per share
tendered by RenongBerhad.
 In a subsequent letter, petitioner sent a managers check for Thirty-three Million Pesos as Bid Security to match the
bid of the Malaysian Group, Messrs. RenongBerhad
 Respondent GSIS refused to accept it.
PETITIONER:
 Petitioner invokes the Filipino First Policy: the State shall give preference to qualified Filipinos in its bid to
acquire 51% of the shares of the Manila Hotel Corporation.
 Petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution
- that the Manila Hotel has been identified with the Filipino nation and has practically become a historical
monument which reflects the vibrancy of Philippine heritage and culture. It has become a part of the
national patrimony.
 Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business
of the hotel which 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.
 Also, since Manila Hotel is part of the national patrimony and its business also unquestionably part of the
national economy petitioner should be preferred after it has matched the bid offer of the Malaysian firm. For
the bidding rules mandate that: “if for any reason, the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer 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.”
RESPONDENTS:
 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
- Thus, for the said provision to operate, there must be existing laws to lay down conditions under which
business may be done.
 Granting that this provision is self-executing, Manila Hotel does not fall under the term national
patrimony which only refers to lands of the public domain and those cited in the first and second paragraphs
of Sec. 2, Art. XII, 1987 Constitution.
 Granting that the Manila Hotel forms part of the national patrimony, 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. Certainly, 51% of the equity of the MHC cannot
be considered part of the national patrimony.
- if the disposition of the shares of the MHC is really contrary to the Constitution, petitioner should have
questioned it right from the beginning and not after it had lost in the bidding.
 The reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which provides that if for any reason,
the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer 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.
- Respondents postulate that 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. Thus the submission by
petitioner of a matching bid is premature since RenongBerhad could still very well be awarded the block of
shares and the condition giving rise to the exercise of the privilege to submit a matching bid had not yet
taken place.
ISSUE:
WON the shares should be awarded to the petitioner by reason of the First Filipino Policy
SC RULING:
The prevailing view is that:in case of doubt, the Constitution should be considered self-executing rather than non-
self-executing Unless the contrary is clearly intended, the provisions of the Constitution should be considered self-
executing, as a contrary rule would give the legislature discretion to determine when, or whether, they shall be
effective. These provisions would be subordinated to the will of the lawmaking body, which could make them
entirely meaningless by simply refusing to pass the needed implementing statute.
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.
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.
Since petitioner has already matched the bid price tendered by RenongBerhad pursuant to the bidding rules,
respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and to execute the
necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. 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 VS.

GOVERNMENT SERVICE INSURANCE SYSTEM

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