Manila Prince Hotel v GSIS
Facts:
On December 28, Government Service Insurance System (GSIS), pursuant to the privatization program of
the Philippine Government under Proclamation No. 50, decided to sell through public bidding 30% to 51% of
the issued and outstanding shares of respondent MHC. 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. In a close bidding held
on 18 September 1995 only two (2) bidders participated: petitioner, 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.
On September 28, 1995, while the execution of contracts and declaration of Renon Berhad as the winning
bidder is pending, petitioner sent a letter to respondent dated 28 September 1995 stating that the bid price
of P44.00 per share matched to Renong Berhad.4 In a subsequent letter dated 10 October 1995 petitioner
sent a manager's check issued by Philtrust Bank for Thirty-three Million Pesos (P33.000.000.00) as Bid
Security to match the bid of the Malaysian Group, Messrs. Renong Berhad. However, the respondent
refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the
matching bid and that the sale of 51% of the MHC may be hastened by respondent GSIS and consummated
with Renong Berhad, petitioner came to this Court on prohibition and mandamus. On 18 October 1995 the
Court issued a temporary restraining order enjoining respondents from perfecting and consummating the
sale to the Malaysian firm
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution which states that and
submits 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 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.6 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. Thus, any transaction involving 51% of the shares of stock of
the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987
Constitution, applies.
(Section 10, Article XII of the 1987 Constitution “Section 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.”)
Respondents except. They maintain that: First, 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(s) . . . Thus, for the said provision to Operate, there must be existing laws "to lay
down conditions under which business may be done."
Issue:
WON the Article Section 10, Art. XII, of the 1987 Constitution shall operate even though there must be an
existing laws to lay down such conditions? YES
Ruling:
A constitution is a system of fundamental laws for the governance and administration of a nation. It is
supreme, imperious, absolute and unalterable except by the authority from which it emanates. It has been
defined as the fundamental and paramount law of the nation. It prescribes the permanent framework of a
system of government, assigns to the different departments their respective powers and duties, and
establishes certain fixed principles on which government is founded. The fundamental conception in other
words is that it is a supreme law to which all other laws must conform and in accordance with which all
private rights must be determined and all public authority administered.
According to 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
into by private persons for private purposes is null and void and without any force and effect. Thus, since the
Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every
statute and contract.
Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be,
impliedly written in the bidding rules issued by respondent, lest the bidding rules be nullified for being
violative of the Constitution. It is a basic principle in constitutional law that all laws and contracts must
conform with the fundamental law of the land. Those which violate the Constitution lose their reason for
being.
Therefore, the court ruled in favor of the petitioner
