Manila Prince vs GSIS

GR No. 122156
Bellosillo J.:
FACTS:
- The Government Service Insurance system pursuant to the privatization program of the
Philippines, decided to sell through a public bidding the 30-51% of the issued and
outstanding shares of the Manila Hotel Corporation (MHC). The winning bidder will be
the partner to provide management expertise and/or an international
marketing/reservation system and financial support to strengthen the profitability and
performance of the Manila Hotel. There were only 2 bidders who participated. The
Manila Prince Hotel Corporation a Filipino corporation which offered to buy 51% of the
MHC or P41.58 per share and Renong Merhad, a Malaysian firm, which bid for the same
number of shares of P44 per share, P2.42 higher than the bid of the MPC.

- Pending the declaration of the Malaysian firm as the winner, the petitioner wrote a letter
stating that they intend to match the bid of P44 per share. It also sent a managers check
issued by PhilTrust Bank for 33 million pesos as Bid Security to match the bid of the
Malaysian Group which the respondent declined to accept.

- The petitioner now filed to the SC for prohibition and mandamus. The petitioner invoked
Sec. 10, second par., Art. XII, of the 1987 Constitution and says 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 t o release the full potential of the Filipino
people. It has become part of national patrimony.

- The SC issued a TRO enjoining the respondent from perfecting and completing the sale.

ISSUE: W/N the sale of the Manila hotel to Renong Merhad, a Malaysian firm is
unconstitutional

RULING: YES

RATIO:
- The second paragraph of Section 10, Article 12 of the Constitution is a mandate that
rights, privileges and concessions covering national economy and patrimony of the state
shall be given preference to qualified Filipinos.

- The term patrimony pertains to heritage. When the constitution speaks about national
patrimony, it also refers to the cultural heritage of the Filipinos

- Manila Hotel is part of the Philippines national patrimony. It is not just a commodity
which can be sold for the sake of privatization. It has become a landmark and a living
testimonial of the Philippine heritage.

- The 51% of the equity of the MHC comes within the purview of the constitutional
 shelter. It cannot be disassociated from the hotel and the land on which the hotel stands.
The Filipino will have to be allowed to match the bid of the foreign entity and if the
Filipino matches the bid, the award should go to the Filipino. The Court also reiterated
how much of national pride will vanish if the nations cultural heritage will fall on the
hands of foreigners.

Section 12: The state shall promote the preferential use of Filipino Labor, domestic materials,
and locally produced goods, and adopt measures that make them competitive.

I. Filipino First Policy

- Gives natively produced products and domestic entities preference in government
purchases
- The policy can extend beyond Filipino first in government transactions and into private
transactions.

Section 13: The state shall pursue a trade policy that serves the general welfare and utilizes all
forms of and arrangements of exchange on the basis of equality and reciprocity.

I. Economic Exchange:
- The forms and arrangements of economic exchange referred to can be any number of
those which are in practice, e.g. counter-trade, common market arrangements, multi-
country arrangements, etc. The idea is not to tie down the country in any 1 form

Must serve the general welfare which includes not just health, safety, security
but also the idea of protection of local enterprises
Must be characterized not only by reciprocity but also by equality which imports
mutual benefit

Section 14: The sustained development of a reservoir of national talents consisting of Filipino
scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled
workers and craftsmen in all fields shall be promoted by the State. The State shall encourage
appropriate technology and regulate its transfer for the national benefit. The practice of all
professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by
law.

I. Care for Filipino professionals and skilled workers

This section Reflects the desire not only to develop a ready reservoir of Filipino
professionals, scientists and skilled workers but also to protect their welfare

The limitation on the practice of professions, however, is subject to exceptions

found in reciprocity laws
Encourages technological independence and regulation of technology transfers for
 the wealth of the nation

Section. 15: The Congress shall create an agency to promote the viability and growth of
cooperatives as instruments for social justice and economic development.

Section 16: The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the common
good and subject to the test of economic viability.

I. Private corporations

- This section is a reenactment of Article XIV, Section 7 of the 1935 Constitution and
Section 4 of the 1973 Constitution

- Its purpose is to insulate Congress against pressures from special interests

To permit the law making body by special law to provide for the organization or
formation or regulation of private corporations, would in effect to offer to it the
temptation in many cases to favor certain groups to the prejudice of other or to the
prejudice of the interests of the country
2nd sentence: includes the ideas that they must show capacity to function efficiently in
business and that they should not go into activities which the private sector can do better
o Economic viability is more than financial viability but also includes capability to
make profit and generate benefits not quantifiable in financial terms

Section 17: In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or
direct the operation of any privately-owned public utility or business affected with public
interest.

I. Temporary take-over

- Deals merely with the temporary state take-over of the operation of any privately owned
public utility or business affected with public interest
- It is justified in times of national emergency, when the public interest requires it.

National emergency- encompassing threat from external aggression, calamities or
natural disasters but not strikes

Duration of the emergency is the measure of the duration of the takeover

- Business affected with public interest: business that has a lot of repercussion in public,
whether it be public utility or other businesses which may partake of the characteristics of
 public utility but which is not yet considered public utility or any business which
concerns a mass-based consumer group and especially among the low income groups

Conditions that must be met before the congress can grant emergency powers to the president:
1. There must be war or emergency
2. The delegation is subject to restriction as prescribed by Congress
3. Delegation must be for a limited period
4. The emergency power must be exercised to carry out a national policy declared by
congress

Presidents power to:

Declare a state of national emergency Exercise Emergency Powers
- No legitimate constitutional objection - Requires a delegation from congress.
can be raised if the president declares
it