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Supremacy of the Constitution Filipino First Policy National Patrimony Qualified

Pursuant to the privatization program of the government, GSIS decided to sell 30-51% of
the Manila Hotel Corporation. Two bidders participated, MPH and Malaysian Firm Renong
Berhad. MPHs bid was at P41.58/per share while RBs bid was at P44.00/share. RB was
the highest bidder hence it was logically considered as the winning bidder but is yet to be
declared so. Pending declaration, MPH matches RBs bid and invoked the Filipino First
policy enshrined under par. 2, Sec. 10, Art. 12 of the 1987 Constitution**, but GSIS refused
to accept. In turn MPH filed a TRO to avoid the perfection/consummation of the sale to RB.
RB then assailed the TRO issued in favor of MPH arguing among others that:
1. Par. 2, Sec. 10, Art. 12 of the 1987 Constitution needs an implementing law because it is
merely a statement of principle and policy (not self-executing);
2. Even if said passage is self-executing, Manila Hotel does not fall under national patrimony.
ISSUE: Whether or not RB should be admitted as the highest bidder and hence be
proclaimed as the legit buyer of shares.
HELD: No. MPH should be awarded the sale pursuant to Art 12 of the 1987 Const. This is
in light of the Filipino First Policy.
Par. 2, Sec. 10, Art. 12 of the 1987 Constitution is self executing. The Constitution is the
fundamental, paramount and supreme law of the nation, it is deemed written in every
statute and contract.
Manila Hotel falls under national patrimony. Patrimony in its plain and ordinary meaning
pertains to heritage. When the Constitution speaks of national patrimony, it refers not only
to the natural resources of the Philippines, as the Constitution could have very well used the
term natural resources, but also to the cultural heritage of the Filipinos. It also refers to our
intelligence in arts, sciences and letters. Therefore, we should develop not only our lands,
forests, mines and other natural resources but also the mental ability or faculty of our
people. Note that, for more than 8 decades (9 now) Manila Hotel has bore mute witness to
the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed
with public interest; its own historicity associated with our struggle for sovereignty,
independence and nationhood.
Herein resolved as well is the term Qualified Filipinos which not only pertains to individuals
but to corporations as well and other juridical entities/personalities. The term qualified
Filipinos simply means that preference shall be given to those citizens who can make a
viable contribution to the common good, because of credible competence and efficiency. It
certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or

organizations that are incompetent or inefficient, since such an indiscriminate preference

would be counter productive and inimical to the common good.
In the granting of economic rights, privileges, and concessions, when a choice has to be
made between a qualified foreigner and a qualified Filipino, the latter shall be chosen
over the former.
**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.

Taada, et al., v. Angara, et al., G.R. No. 118295, May 2, 1997

(En Banc)


Petitioners Senators Taada, et al. questioned the constitutionality of the concurrence by

the Philippine Senate of the Presidents ratification of the international Agreement establishing the
World Trade Organization (WTO). They argued that the WTO Agreement violates the mandate of
the 1987 Constitution to develop a self-reliant and independent national economy effectively
controlled by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential
use of Filipino labor, domestic materials and locally produced goods. Further, they contended that
the national treatment and parity provisions of the WTO Agreement place nationals and products
of member countries on the same footing as Filipinos and local products, in contravention of the
Filipino First policy of our Constitution, and render meaningless the phrase effectively controlled
by Filipinos.
Does the 1987 Constitution prohibit our country from participating in worldwide trade
liberalization and economic globalization and from integrating into a global economy that is
liberalized, deregulated and privatized?


[The Court DISMISSED the petition. It sustained the concurrence of the Philippine Senate of
the Presidents ratification of the Agreement establishing the WTO.]
NO, the 1987 Constitution DOES NOT prohibit our country from participating in
worldwide trade liberalization and economic globalization and from integrating into a global
economy that is liberalized, deregulated and privatized.
There are enough balancing provisions in the Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO Agreement.
[W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor
and enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. In other words, the Constitution did
not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services
in the development of the Philippine economy. While the Constitution does not encourage the
unlimited entry of foreign goods, services and investments into the country, it does not prohibit them
either.In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign
competition that is unfair.



[T]he constitutional policy of a self-reliant and independent national economy does not
necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
economic seclusion nor mendicancy in the international community. As explained by
Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of
overdependence on external assistance for even its most basic needs. It does not mean autarky or
economic seclusion; rather, it means avoiding mendicancy in the international community.
Independence refers to the freedom from undue foreign control of the national economy, especially
in such strategic industries as in the development of natural resources and public utilities.
The WTO reliance on most favored nation, national treatment, and trade without
discrimination cannot be struck down as unconstitutional as in fact they are rules of equality and
reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on equality
and reciprocity, the fundamental law encourages industries that are competitive in both domestic
and foreign markets, thereby demonstrating a clear policy against a sheltered domestic trade
environment, but one in favor of the gradual development of robust industries that can compete with
the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown
capability and tenacity to compete internationally. And given a free trade environment, Filipino
entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to
prosper against the best offered under a policy of laissez faire.



It is true, as alleged by petitioners, that broad constitutional principles require the State to
develop an independent national economy effectively controlled by Filipinos; and to protect and/or
prefer Filipino labor, products, domestic materials and locally produced goods. But it is equally true
that such principles while serving as judicial and legislative guides are not in themselves
sources of causes of action. Moreover, there are other equally fundamental constitutional principles
relied upon by the Senate which mandate the pursuit of a trade policy that serves the general

welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity
and the promotion of industries which are competitive in both domestic and foreign markets,
thereby justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the
exercise of legislative and judicial powers is balanced by the adoption of the generally accepted
principles of international law as part of the law of the land and the adherence of the Constitution to
the policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it a part of the law of the land is a legitimate
exercise of its sovereign duty and power. We find no patent and gross arbitrariness or despotism
by reason of passion or personal hostility in such exercise. It is not impossible to surmise that this
Court, or at least some of its members, may even agree with petitioners that it is more advantageous
to the national interest to strike down Senate Resolution No. 97. But that is not a legal reason to
attribute grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute
grave abuse in the exercise of our own judicial power and duty. Ineludibly, what the Senate did was
a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside
the realm of judicial inquiry and review. That is a matter between the elected policy makers and the
people. As to whether the nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing their policy
makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political
desire of a member.