G.R. No. 122156 - Separate Dissenting Opinion

G.R. No. 122156, February 3, 1997,
♦ Decision, Bellosillo, [J]
♦ Separate Opinion, Padilla, [J]
♦ Concurring Opinion, Vitug, [J]
♦ Concurring Opinion, Mendoza, [J]
♦ Separate Opinion, Torres, [J]
♦ Dissenting Opinion, Puno, [J]
♦ Dissenting Opinion, Panganiban, [J]

MANILA PRINCE HOTEL, PETITIONER, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION AND OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, RESPONDENTS.

This is a petition for prohibition and mandamus filed by the Manila Prince Hotel Corporation, a domestic corporation, to stop the government Service Insurance System (GSIS) from selling the controlling shares of the Manila Hotel Corporation to a foreign corporation. Allegedly, the sale violates the second paragraph of section 10, Article XII of the Constitution.

Respondent GSIS is a government-owned and controlled corporation. It is the sole owner of the Manila Hotel which it operates through its subsidiary, the Manila Hotel Corporation. Manila Hotel was included in the privatization program of the government. In 1995, GSIS proposed to sell to interested buyers 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000 shares, in the Manila Hotel Corporation. After the absence of bids at the first public bidding, the block of shares offered for sale was increased from a maximum of 30% to 51%. Also, the winning bidder, or the eventual “strategic partner” of the GSIS was required to “provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel.”1 The proposal was approved by respondent Committee on Privatization.

In July 1995, a conference was held where prequalification documents and the bidding rules were furnished interested parties. Petitioner Manila Prince Hotel, a domestic corporation, and Renong Berhad, a Malaysian firm with ITT Sheraton as operator, prequalified.2

The bidding rules and procedures entitled “Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization” provide:

“I INTRODUCTION AND HIGHLIGHTS
DETERMINING THE WINNING BIDDER/STRATEGIC PARTNER

The party that accomplishes the steps set forth below will be declared the Winning Bidder/Strategic Partner and will be awarded the Block of Shares:

The second public bidding was held on September 18, 1995. Petitioner bidded P41.00 per share for 15,300,000 shares and Renong Berhad bidded P44.00 per share also for 15,300,000 shares. The GSIS declared Renong Berhad the highest bidder and immediately returned petitioner’s bid security.

On September 28, 1995, ten days after the bidding, petitioner wrote to GSIS offering to match the bid price of Renong Berhad. It requested that the award be made to itself citing the second paragraph of Section 10, Article XII of the Constitution. It sent a manager's check for thirty-three million pesos (P33,000,000.00) as bid security.

Respondent GSIS, then in the process of negotiating with Renong Berhad the terms and conditions of the contract and technical agreements in the operation of the Hotel, refused to entertain petitioner’s request.

Hence, petitioner filed the present petition. We issued a temporary restraining order on October 18, 1995.

Petitioner anchors its plea on the second paragraph of Article XII, Section 10 of the Constitution4 on the “National Economy and Patrimony” which provides:

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

Anent the first issue, it is now familiar learning that a Constitution provides the guiding policies and principles upon which is built the substantial foundation and general framework of the law and government.5 As a rule, its provisions are deemed self-executing and can be enforced without further legislative action.6 Some of its provisions, however, can be implemented only through appropriate laws enacted by the Legislature, hence not self-executing.

To determine whether a particular provision of a Constitution is self-executing is a hard row to hoe. The key lies on the intent of the framers of the fundamental law oftentimes submerged in its language. A searching inquiry should be made to find out if the provision is intended as a present enactment, complete in itself as a definitive law, or if it needs future legislation for completion and enforcement.7 The inquiry demands a micro-analysis of the text and the context of the provision in question.8

Courts as a rule consider the provisions of the Constitution as self-executing,9 rather than as requiring future legislation for their enforcement.10 The reason is not difficult to discern. For if they are not treated as self-executing, the mandate of the fundamental law ratified by the sovereign people can be easily ignored and nullified by Congress.11 Suffused with wisdom of the ages is the unyielding rule that legislative actions may give breath to constitutional rights but congressional inaction should not suffocate them.12

Thus, we have treated as self-executing the provisions in the Bill of Rights on arrests, searches and seizures,13 the rights of a person under custodial investigation,14 the rights of an accused,15 and the privilege against self-incrimination.16 It is recognized that legislation is unnecessary to enable courts to effectuate constitutional provisions guaranteeing the fundamental rights of life, liberty and the protection of property.17 The same treatment is accorded to constitutional provisions forbidding the taking or damaging of property for public use without just compensation.18

Contrariwise, case law lays down the rule that a constitutional provision is not self-executing where it merely announces a policy and its language empowers the Legislature to prescribe the means by which the policy shall be carried into effect.19 Accordingly, we have held that the provisions in Article II of our Constitution entitled “Declaration of Principles and State Policies” should generally be construed as mere statements of principles of the State.20We have also ruled that some provisions of Article XIII of “Social Justice and Human Rights, “21 and Article XIV on “Education, Science and Technology, Arts, Culture and Sports”22 cannot be the basis of judicially enforceable rights. Their enforcement is addressed to the discretion of Congress though they provide the framework of legislation23 to effectuate their policy content.24

Guided by this map of settled jurisprudence, we now consider whether Section 10, Article XII of the 1987 Constitution is self-executing or not. It reads:

“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.”

The first paragraph directs Congress to reserve certain areas of investments in the country25 to Filipino citizens or to corporations sixty per cent26 of whose capital stock is owned by Filipinos. It further commands Congress to enact laws that will encourage the formation and operation of one hundred percent Filipino-owned enterprises. In checkered contrast, the second paragraph orders the entire State to give preference to qualified Filipinos in grant of rights and privileges covering the national economy and patrimony. The third paragraph also directs the State to regulate foreign investments in line with our national goals and well-set priorities.

The first paragraph of Section 10 is not self-executing. By its express text, there is a categorical command for Congress to enact laws restricting foreign ownership in certain areas of investments in the country and to encourage the formation and operation of wholly-owned Filipino enterprises. The right granted by the provision is clearly still in ease. Congress has to breath life to the right by means of legislation. Parenthetically, this paragraph was plucked from section 3, Article XIV of the 1973 Constitution.27 The provision in the 1973 Constitution affirmed our ruling in the landmark case of Lao Ichong v. Hernandez,28 where we upheld the discretionary authority of Congress of Filipinize certain areas of investments.29 By reenacting the 1973 provision, the first paragraph of section 10 affirmed the power of Congress to nationalize certain areas of investments in favor of Filipinos.

The second and third paragraphs of Section 10 are different. They are directed to the State and not to Congress alone which is but one of the three great branches of our government. Their coverage is also broader for they cover “the national economy and patrimony” and “foreign investments within [the] national jurisdiction” and not merely “certain areas of investments.” Beyond debate, they cannot be read as granting Congress the exclusive power to implement by law the policy of giving preference to qualified Filipinos in the conferral of rights and privileges covering our national economy and patrimony. Their language does not suggest that any of the State agency or instrumentality has the privilege to hedge or to refuse its implementation for any reason whatsoever. Their duty to implement is unconditional and it is now. The second and the third paragraphs of Section 10, Article XII are thus self-executing.

This submission is strengthened by Article II of the Constitution entitled “Declaration of Principles and State Policies.” Its Section 19 provides that “[T]he State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.” It engrafts the all-important Filipino First Policy in our fundamental law and by the use of the mandatory word “shall,” directs its enforcement by the whole State without any pause or a half-pause in time.

The second issue is whether the sale of a majority of the stocks of the Manila Hotel Corporation involves the disposition of part of our national patrimony. The records of the Constitutional Commission show that the Commissioners entertained the same view as to its meaning. According to Commissioner Nolledo, “patrimony” refers not only to our rich natural resources but also to the cultural heritage of our race.30 By this yardstick, the sale of Manila Hotel falls within the coverage of the constitutional provision giving preferential treatment to qualified Filipinos in the grant of rights involving our national patrimony. The unique value to the Manila Hotel to our history and culture cannot be viewed with a myopic eye. The value to hotel goes beyond pesos and centavos. As chronicled by Beth Day Romulo,31 the hotel first opened on July 4, 1912 as a first-class Hotel built by the American Insular Government for Americans living in, or passing through, Manila while travelling to the Orient. Indigenous materials and Filipino craftsmanship were utilized in its construction. For sometime, it was exclusively used by American and Caucasian travelers and served as the “official guesthouse” of the American Insular Government for visiting foreign dignitaries. Filipinos began coming to the Hotel as guests during the Commonwealth period. When the Japanese occupied Manila, it served as military headquarters and lodging fo the highest-ranking officers from Tokyo. It was at the Hotel and the Intramuros that the Japanese made their last stand during the Liberation of Manila. After the war, the Hotel again served foreign guests and Filipinos alike. Presidents and kings, premiers and potentates, as well as glamorous international film and sports celebrities were house in the Hotel. It was also the situs of international conventions and conferences. In the local scene, it was the venue of historic meetings, parties and conventions of political parties. The Hotel has reaped and continues reaping numerous recognitions and awards from international hotel and travel award-giving bodies, a fitting acknowledgment of Filipino talent and ingenuity. These are judicially cognizable facts which cannot be bent by a biased mind.

The Hotel may not, as yet, have been declared a national cultural treasure pursuant to Republic Act No. 4846 but that does not exclude it from our national patrimony. Republic Act. No. 4846, “The Cultural Properties Preservation and Protection Acts,” merely provides a procedure whereby a particular cultural property may be classified a “national cultural treasure” or an “important cultural property.”32 Approved on June 18, 1966 and amended by P.D. 374 in 1974, the law is limited in its reach and cannot be read as the exclusive law implementing section 10, Article XII of the 1987 Constitution. to be sure, the law does not equate cultural treasure and cultural property as synonymous to the phrase “patrimony of the nation.”

The third issue is whether the constitutional command to the State includes the respondent GSIS. A look at its charter will reveal that GSIS is a government-owned and controlled corporation that administers funds that come from the monthly contributions of government employees and the government.33 The funds are held in trust for a distinct purpose which cannot be disposed of indifferently.34 They are to be used to finance the retirement, disability and life insurance benefits of the employees and the administrative and operational expenses of the GSIS. 35 Excess funds, however, are allowed to be invested in business and other ventures for the benefit of the employees.36 It is thus contended that the GSIS’ investment in the Manila Hotel Corporation is a simple business venture, hence, an act beyond the contemplation of section 10, paragraph 2 of Article XII of the Constitution.

The submission is unimpressive. The GSIS in not a pure private corporation. It is essentially a public corporation created by Congress and granted an original charter to serve a public purpose. It is subject to the jurisdictions of the Civil Service Commission.37 and the Commission on Audit.38 As a state-owned and controllecorporation, it is skin-bound to adhere to the policies spelled out in the Constitution especially those designed to promote the general welfare of the people. One of these policies is the Filipino First policy which the people elevated as a constitutional command.

The fourth issue demands that we look at the content of the phrase “qualified Filipinos” and their “preferential right.” The Constitution desisted from defining their contents. This is as it ought to be for a Constitution only lays down flexible policies and principles which can be bent to meet today’s manifest needs and tomorrow’s unmanifested demands. Only a constitution strung with elasticity can grow as a living constitution.

Thus, during the deliberation in the Constitutional Commission, Commissioner Nolledo brushed aside a suggestion to define the phrase “qualified Filipinos.” He explained that present and prospective “laws” will take care of the problem of its interpretation, viz:

THE PRESIDENT. What is the suggestion of Commissioner Rodrigo? Is it to remove the word “QUALIFIED?”

MR. RODRIGO. No, no, but say definitely “TO QUALIFIED FILIPINOS” as against whom? As against aliens over aliens?

MR. NOLLEDO. Madam President, I think that is understood. We use the word “QUALIFIED” because the existing laws or the prospective laws will always lay down conditions under which business may be done. For example, qualifications on capital, qualifications on the setting up of other financial structures, et cetera.

MR. RODRIGO. If we say, “PREFERENCE TO QUALIFIED FILIPINOS,” it can be understood as giving preference to qualified Filipinos as against Filipinos who are not qualified.

MR. NOLLEDO. Madam President, that was the intention of the proponents. The committee has accepted the amendment.

As previously discussed, the constitutional command to enforce the Filipino First policy is addressed to the State and not to Congress alone. Hence, the word “laws” should not be understood as limited to legislations but all state actions which include applicable rules and regulations adopted by agencies and instrumentalities of the State in the exercise of their rule-making power. In the case at bar, the bidding rules and regulations set forth the standards to measure the qualifications of bidders Filipinos and foreigners alike. It is not seriously disputed that petitioner qualified to bid as did Renong Berhad.39

Thus, we come to the critical issue of the degree preference which GSIS should have accorded petitioner, qualified Filipino, over Renong Berhad, a foreigner, in the purchase of the controlling shares of the Manila Hotel. Petitioner claims that after losing the bid, this right of preference gives it a second chance to match the highest bid or Renong Berhad.

With due respect, I cannot sustain petitioner’s submission. I prescind from the premise that the second paragraph of section 10, Article XII of the Constitution is pro-Filipino but not anti-Alien. It is pro-Filipino for it gives preference to Filipinos. It is not, however, anti-alien per se for it does not absolutely bar aliens in the grant of rights, privileges and concessions covering the national economy and patrimony. Indeed, in the absence of qualified Filipinos, the State is not prohibited from granting these rights, privileges and concessions to foreigners if the act will promote the wealth of the nation.

In implementing the policy articulated in section 10, Article XII of the Constitution, the stellar task of our State policy-makers is to maintain a creative tension between two desiderata - - first, the need to develop our economy and patrimony with the help of foreigners it necessary, and, second, the need to keep our economy controlled by Filipinos.ℒαwρhi৷ Rightfully, the framers of the Constitution did not define the degree of the right of preference to be given to qualified Filipinos. They knew that for the right to serve the general welfare, it must have a malleable content that can be adjusted by our policy-makers to meet the changing needs of our people. In fine, the right of preference of qualified Filipinos is to be determined by degree as time dictates and circumstances warrant. The lesser the need for alien assistance, the greater the degree of the right of preference can be given to Filipinos and vice versa.

Again, it should be stressed that the right and the duty to determine the degree of this privilege at any given time is addressed to the entire State. While under our constitutional scheme, the right primarily belongs to Congress as the lawmaking department of our government, other branches of government, and all their agencies and instrumentalities, share the power to enforce this state policy. Within the limits of their authority, they can act or promulgate rules and regulations defining the degree of this right of preference in cases where they have to make grants involving the national economy and judicial duty. On the other hand, our duty is to strike down acts of the State that violate the policy.

To date, Congress has not enacted a law defining the degree of the preferential right. Consequently, we must turn to the rules and regulations of respondents Committee on Privatization and GSIS to determine the degree of preference that petitioner in entitled to a qualified Filipino in the subject sale. A tearless look at the rules and regulations will show that they are silent on the degree of preferential right to be accorded a qualified Filipino bidder. Despite their silence, however, they cannot be read to mean that they do not grant any degree of preference to petitioner for paragraph 2, section 10, Article XII of the Constitution is deemed part of said rules and regulations. Pursuant to legal hermeneutics which demand that we interpret rules to save them from unconstitutionality, I submit that the right of preference of petitioner arises only if it tied the bid of Renong Berhad. In that instance, all things stand equal, and petitioner, as a qualified Filipino bidder, should be preferred.

It is with deep regret that I cannot subscribe to the view that petitioner has a right to match the bid of Renong Berhad. Petitioner’s submission must be supported by the rules but even if we examine the rules inside-out a thousand times, they can not justify the claimed right. Under the rules, the right to match the highest bid arises only “if the for any reason, the highest bidder cannot be awarded the block of shares x x x.” No reason has arisen that will prevent the award to Renong Berhad. It qualified as a bidder. It complied with the procedure of bidding. It tendered the highest bid. It was declared as the highest bidder by the GSIS and the rules say this decision is final. It deserves the award as a matter of right for the rules clearly did not give to the petitioner as a qualified Filipino the privilege to match the higher bid of a foreigner. What the rules did not grant, petitioner cannot demand. Our sympathies may be with petitioner but the court has no power to extend the latitude and longtitude of the right of preference as defined by the rules. The parameters of the right of preference depend on a galaxy of facts and factors whose determination belongs to the province of the policy-making branches and agencies of the State. We are duty-bound to respect that determination even if we differ with the wisdom of their judgment. The right they grant may be little but we must uphold the grant for as long as the right of preference is not denied. It is only when the State action amounts to a denial of the right that the Court can come in and strike down the denial as unconstitutional.

Finally, I submit that petitioner is estopped from assailing the winning bid of Renong Berhad. Petitioner was aware of the rules and regulations of the bidding. It knew that the rules and regulations do not provide that a qualified Filipino bidder can match the winning bid after submitting an inferior bid. It knew that the bid was open to foreigners and that foreigners qualified even during the first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed to respect. It cannot be allowed to obey the rules when it wins and disregard them when it loses. If sustained, petitioners’ stance will wreak havoc of the essence of bidding. Our laws, rules and regulations require highest bidding to raise as much funds as possible for the government to maximize its capacity to deliver essential services to our people. This is a duty that must be discharged by Filipinos and foreigners participating in a bidding contest and the rules are carefully written to attain this objective. Among others, bidders are prequalified to insure their financial capability. The bidding is secret and the bids are sealed to prevent collusion among the parties. This objective will be undermined if we grant petitioner the privilege to know the winning bid and a chance to match it. For plainly, a second chance to bid will encourage a bidder not to strive to give a highest bid in the first bidding.

We support the Filipino First policy without any reservation. The visionary nationalist Don Claro M. Recto has warned us that the greatest tragedy that can befall a Filipino is to be an alien in his own land. The Constitution has embodied Recto’s counsel as a state policy and our decision should be in sync with this policy. But while the Filipino First policy requires that we incline to a Filipino, it does not demand that we wrong an alien. Our policy makers can write laws and rules giving favored treatment to the Filipino but we are not free to be unfair to a foreigner after writing the laws and the rules. After the laws are written, they must be obeyed as written, by Filipinos and foreigners alike. The equal protection clause of the Constitution protects all against unfairness. We ca be pro-Filipino without unfairness to foreigners.