Nov 2, 2010

Manila Prince Hotel v. Government Service Insurance System

G.R. No. 122156, February 3, 1997, 267 SCRA 408
FACTS: The Government Service Insurance System (GSIS), pursuant to the privatization program of the government, decided to sell through public bidding 30% to 51 % of the issued and outstanding shares of respondent Manila Hotel (MHC). In a close bidding, only two bidders participated. Petitioner Manila Prince, a Filipino Corporation, which offered to buy 51% of the MHC at P41.58 per share and Renong Berhad, a Malaysian Firm, which bid for the same number of shares at P44.00 per share. Pending the declaration of Renong Berhad as the winning bidder, petitioner matches the bid price of P44.00 per share by Renong Berhad. Subsequently, petitioner sent a manager's check as bid security to match the bid of Renong Berhad which respondent GSIS refuse to accept. Apprehensive that GSIS has disregarded the tender of the matching bid and that the sale may be consummated which Renong Berhad, petitioner filed a petition before the Supreme Court.

ISSUE: Whether or not petitioner should be preferred after it has match the bid offered of Malaysian firm under Section 10, second paragraph of Article 12 of the 1987 Constitution.

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. Since the constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract. Article 12, Section 10, paragraph 2 of the 1987 Constitution provides that "in the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos." It means just that qualified Filipinos shall be preferred. When the Constitution speaks of "national patrimony", it refers not only to the natural resources of the Philippines but also to the cultural heritage of the Filipinos. Manila Hotel has become a landmark- a living testimonial of Philippine Heritage. While it was restrictively an American Hotel when it first opened, it immediately evolved to be truly Filipino. Verily, Manila Hotel has become part of our national economy and patrimony. Respondents further argue that the Constitutional provision is addressed to the State, not to GSIS which by itself possesses a separate and distinct personality. In constitutional jurisprudence, the acts of a person distinct from the government are considered "state action" covered by the Constitution (1) when the activity it engages 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. Without doubt, the transaction entered into by the GSIS is in fact a transaction of the State and therefore subject to the constitutional command. Therefore, the GSIS is directed to accept the matching bid of petitioner Manila Prince Hotel.


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