Manila Prince Hotel v. GSIS, G.R. No.

122156, February 3, 1997

DECISION

(En Banc)

BELLOSILLO, J.:

I. THE FACTS

Pursuant to the privatization program of the Philippine Government, the GSIS sold in public auction
its stake in Manila Hotel Corporation (MHC). Only 2 bidders participated: petitioner Manila Prince Hotel
Corporation, 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.

Petitioner filed a petition before the Supreme Court to compel the GSIS to allow it to match the bid
of Renong Berhad. It invoked the Filipino First Policy enshrined in Sec.10, paragraph 2, Article XII of the
1987 Constitution, which provides that “in the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give preference to qualified Filipinos.”

II. THE ISSUES

1. Whether Sec.10, paragraph 2, Article XII of the 1987 Constitution is a self-executing provision
and does not need implementing legislation to carry it into effect;

2. Assuming Sec.10, paragraph 2, Article XII is self-executing, whether the controlling shares of
the Manila Hotel Corporation form part of our patrimony as a nation;

3. Whether GSIS is included in the term “State,” hence, mandated to implement Sec.10,
paragraph 2, Article XII of the Constitution; and

4. Assuming GSIS is part of the State, whether it should give preference to the petitioner, a Filipino
corporation, over Renong Berhad, a foreign corporation, in the sale of the controlling shares of
the Manila Hotel Corporation.

III. THE RULING

[The Court, voting 11-4, DISMISSED the petition.]

 1. YES, Sec.10, paragraph 2, Article XII of the 1987 Constitution is a self-executing
provision and does not need implementing legislation to carry it into effect.

Sec. 10, second par.2, of Art XII is couched in such a way as not to make it appear that it is non-
self-executing but simply for purposes of style. But, certainly, the legislature is not precluded from enacting
further laws to enforce the constitutional provision so long as the contemplated statute squares with the
Constitution. Minor details may be left to the legislature without impairing the self-executing nature of
constitutional provisions.

xxx xxx xxx

Respondents . . . argue that the non-self-executing nature of Sec. 10, second par.2, of Art. XII is
implied from the tenor of the first and third paragraphs of the same section which undoubtedly are not self-
executing. The argument is flawed. If the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation and operation of enterprises fully owned by
Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exercise authority
over foreign investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same
logic, the second paragraph can only be self-executing as it does not by its language require any legislation
in order to give preference to qualified Filipinos in the grant of rights, privileges and concessions covering
the national economy and patrimony. A constitutional provision may be self-executing in one part and non-
self-executing in another.

xxx. Sec. 10, second par.2, Art. XII of the 1987 Constitution is a mandatory, positive command
which is complete in itself and which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any legislation to put it in operation. It
is per se judicially enforceable. When our Constitution mandates that [i]n the grant of rights, privileges, and
concessions covering national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that - qualified Filipinos shall be preferred. And when our Constitution declares that
a right exists in certain specified circumstances an action may be maintained to enforce such right
notwithstanding the absence of any legislation on the subject; consequently, if there is no statute especially
enacted to enforce such constitutional right, such right enforces itself by its own inherent potency and
puissance, and from which all legislations must take their bearings. Where there is a right there is a
remedy. Ubi jus ibi remedium.

2. YES, the controlling shares of the Manila Hotel Corporation form part of our patrimony
as a nation.

In its plain and ordinary meaning, the term patrimony 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.
 xxx xxx xxx

For more than eight (8) decades 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. Verily, Manila Hotel has
become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes
within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that
anyone who acquires or owns the 51% will have actual control and management of the hotel. In this
instance, 51% of the MHC cannot be disassociated from the hotel and the land on which the hotel edifice
stands. Consequently, we cannot sustain respondents’ claim that the Filipino First Policy provision is not
applicable since what is being sold is only 51% of the outstanding shares of the corporation, not the Hotel
building nor the land upon which the building stands.

3. YES, GSIS is included in the term “State,” hence, it is mandated to implement Sec.10,
paragraph 2, Article XII of the Constitution.

It is undisputed that the sale of 51% of the MHC could only be carried out with the prior approval of
the State acting through respondent Committee on Privatization. [T]his fact alone makes the sale of the
assets of respondents GSIS and MHC a “state action.” In constitutional jurisprudence, the acts of persons
distinct from the government are considered “state action” covered by the Constitution (1) when the activity
it engages in 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. It is evident that the act of respondent GSIS in selling 51% of its share in
respondent MHC comes under the second and third categories of “state action.” Without doubt therefore
the transaction, although entered into by respondent GSIS, is in fact a transaction of the State and therefore
subject to the constitutional command.

When the Constitution addresses the State it refers not only to the people but also to the
government as elements of the State. After all, government is composed of three (3) divisions of power -
legislative, executive and judicial. Accordingly, a constitutional mandate directed to the State is
correspondingly directed to the three (3) branches of government. It is undeniable that in this case the
subject constitutional injunction is addressed among others to the Executive Department and respondent
GSIS, a government instrumentality deriving its authority from the State.

4. YES, GSIS should give preference to the petitioner in the sale of the controlling shares
of the Manila Hotel Corporation.

It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning
bidder. The bidding rules expressly provide that the highest bidder shall only be declared the winning
bidder after it has negotiated and executed the necessary contracts, and secured the requisite
approvals. Since the Filipino First Policy provision of the Constitution bestows preference
on qualified Filipinos the mere tending of the highest bid is not an assurance that the highest bidder will be
declared the winning bidder. Resultantly, respondents are not bound to make the award yet, nor are they
under obligation to enter into one with the highest bidder. For in choosing the awardee respondents are
mandated to abide by the dictates of the 1987 Constitution the provisions of which are presumed to be
known to all the bidders and other interested parties.

xxx xxx xxx

Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the Highest Bidder cannot
be awarded the Block of Shares, GSIS may offer this to other Qualified Bidders that have validly submitted
bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per
share. Certainly, the constitutional mandate itself is reason enough not to award the block of shares
immediately to the foreign bidder notwithstanding its submission of a higher, or even the highest, bid. In
fact, we cannot conceive of a stronger reason than the constitutional injunction itself.

In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the
grant of rights, privileges and concessions covering the national economy and patrimony, thereby
exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to match the bid
of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should go to the
Filipino. It must be so if we are to give life and meaning to the Filipino First Policy provision of the 1987
Constitution. For, while this may neither be expressly stated nor contemplated in the bidding rules, the
constitutional fiat is omnipresent to be simply disregarded. To ignore it would be to sanction a perilous
skirting of the basic law.
 Santiago vs. COMELEC, G.R. No, 127325, March 19, 1997
SEPTEMBER 16, 2018

FACTS:

On 6 December 1996, Atty. Jesus Delfin (President of the People’s Initiative for
Reforms, Modernization and Action or PIRMA) filed with COMELEC a Petition to
Amend the Constitution, to Lift Term Limits of Elective Officials (Delfin Petition) through
Peoples’ Initiative based on Article XVII, Section 2 of the 1987 Constitution, where
Delfin asked the COMELEC for an order:

 fixing the time and dates for signature gathering all over the country;
 causing the necessary publications of the said Order in newspapers of general
and local circulation; and
 instructing Municipal Election Registrars in all regions to assist petitioners and
volunteers in establishing signing stations at the time and dates designated for
the purpose.

The COMELEC through its Chairman issued an Order directing Delfin to cause the
publication of the petition; and setting the case for hearing.

At the hearing, the petitioner-intervenors appeared and on the same day, Senator
Roco filed a Motion to Dismiss the Delfin Petition on the ground that it is not the
initiatory petition properly cognizable by the COMELEC.

Petitioner filed the special civil action for prohibition raising the following arguments:

 The constitutional provision on people’s initiatives to amend the Constitution can

only be implemented by a law to be passed by Congress.
 RA No. 6735 provides for 3 systems of initiative (Constitution, statutes, local
legislation) but it failed to provide any subtitle on initiative on the Constitution.
 RA 6735 only covers laws and not constitutional amendments.
 COMELEC Resolution No. 2300 (1991) to govern the conduct of initiative is ultra
vires (beyond legal capacity) because only Congress is authorized by the
Constitution to pass implementing law.
 People’s initiative is limited to amendments to the Constitution and not revision.
 Congress has not yet appropriated funds for people’s initiatives.

ISSUES/HELD:

1. Whether RA No. 6735 was intended to cover initiative on amendments to the

Constitution – NO.
2. Whether that portion of COMELEC Resolution No. 2300 regarding the conduct
of initiative on amendments to the Constitution is valid – NO.
3. Whether the COMELEC has jurisdiction over a petition solely intended to obtain
an order – NO.
4. Whether the lifting of term limits as proposed in the Delfin Petition would
constitute a revision or an amendment to the Constitution – MOOT AND
ACADEMIC.
 5. Whether it is proper for the Supreme Court to take cognizance of the petition
when there is a pending case before the COMELEC – YES.

RATIO:

1. Article XVII, Section 2 of the 1987 Constitution is not self-executor and RA

6735 cannot be the implementing legislation.

Article XVII, Section 2 of the 1987 Constitution is not self-executory. The details for
carrying out the provision are left to the legislature. The interpellations which ensued
on the modified amendment to Section 2 clearly showed that it was a legislative act
which must implement the exercise of the right. Furthermore, the modified amendment
confines initiative to amendments to and not revision of the Constitution. However, RA
6735 does not provide for the contents of a petition for initiative on the Constitution
because there was no subtitle provided for it. Hence, RA 6735 is not sufficient to be
the implementing legislation for Article XVII, Section 2 of the Constitution.

2. The COMELEC Resolution is not valid.

Empowering the COMELEC, an administrative body, to promulgate rules and

regulations is a form of delegation of legislative authority under the rule that what has
been delegated cannot be delegated. It will only be valid if the law a) is complete in
itself; and b) fixes a standard. However, these requirements were not met.

3. COMELEC has no jurisdiction over a petition solely intended to obtain an

order.

COMELEC acquires jurisdiction over a petition for initiative only after its filing and thus,
becomes the initiatory pleading. The Delfin petition is not an initiatory pleading since it
does not contain signatures of the required number of voters (under Sec 2 of Article
XVII), COMELEC has no jurisdiction before its filing.

4. There is no need to discuss whether the petition presents an amendment

or revision of the Constitution.

The discussion on the issue of whether it is an amendment or a revision is

unnecessary if not academic since COMELEC has no jurisdiction.

5. The Supreme Court can take cognizance of the present petition for
prohibition.

COMELEC has no jurisdiction so it must be stopped from proceeding further.

Moreover, petition for prohibition is the proper remedy. In this case, the writ is
necessary in view of the highly divisive consequences on the body politic of the
questioned Order. This political instability and legal confusion climate begs for judicial
statesmanship because only the SC can save the nation in peril and uphold the
majesty of the Constitution when the system of constitutional law is threatened.
 Lambino vs. COMELEC, G.R. No. 174153, October 25, 2006
SEPTEMBER 16, 2018

FACTS:

On August 25, 2006, the Lambino Group filed a petition with the COMELEC to hold
plebiscite that will ratify their initiative petition under Section 5(b) and (c) and Section 7
of RA 6735.

The Lambino Group claims that their petition has the support of 6,327,952 individuals
satisfying the requirement that the signatories of the petition constitute 12% of all
registered voters with each legislative district represented by at least 3% of its
registered voters.

The Lambino Group’s initiative petition modifies Sections 1-7 of Article VI and Sections
1-4 of Article VII of the Constitution and adds Article XVIII entitled ‘Transitory
Provisions” to it shifting the country’s form of government from Bicameral-Presidential
to Unicameral-Parliamentary.

Days later, the Lambino Group filed an amended petition with the COMELEC.
However, the COMELEC issued its resolution denying due course to the Lambino
Groups’s petition invoking Santiago v. Commission on Elections, which found RA 6735
as inadequate, in stating that there is no enabling law governing initiative petitions
such as that of the Lambino Group to amend the Constitution.

The Lambino Group is petitioning for the issuance of writs of certiorari and mandamus
to set aside the COMELEC Resolution of August 31, 2006 and to compel the
COMELEC to give due course to their initiative petition. The petitioners and supporting
intervenors hold the view that COMELEC committed grave abuse of discretion in
relying on Santiago.

Opposing intervenors maintain that Santiago is a binding precedent and they also
challenge:

 The Lambino Group’s standing to file the petition

 The validity of the signature gathering and verification process
 The Lambino Group’s compliance with Section 2, Article XVII of the Constitution
The nature of the proposed changes as revisions and not mere amendments.
 The Lambino Group’s compliance with RA 6735 limiting initiative petitions to
only one subject.

ISSUES:

1. Whether the Lambino Group’s initiative petition complied with Section 2, Article XVII
of the Constitution – NO.

2. Whether the Court should revisit its ruling on Santiago v. COMELEC which declared
RA 6735 “incomplete, inadequate, or wanting in essential terms and conditions” to
implement the initiative clause proposals to amend the Constitution – NO
3. Whether the COMELEC committed grave abuse of discretion in denying due course
to the Lambino Group’s petition – NO.

RATIO:

1. The Lambino Group failed to comply with Section 2, Article XVII of the
Constitution.

a. The petition is not directly proposed by the people.

The Lambino Group’s Initiative does comply with the requirement that the amendment
be “directly proposed by the people upon a petition” because the Lambino group failed
to present the full text of the proposed changes to the Constitution to the signatories
and thus it cannot be assumed that the signatories had knowledge of the full nature
and effect of the changes they were supporting. Given that the Initiative first gathered
signatures without showing the full text of the proposed amendments, it can be seen
as a “gigantic fraud on the people.”

While Section 2, Article XVII does not explicitly state that the full text of proposed
amendments to the constitution should be presented to the people before they sign the
petition, as shown on the record of the deliberations of the Constitutional Commission,
it was the intent of the framers that an amendment is “directly proposed by the people
through initiative upon a petition” only if the people sign on a petition that contains the
full text of the proposed amendments.

A signature requirement would be meaningless if the signatories have not first been
informed of the full extent of the proposal he/she is signing, and that the attachment of
the full text proposal would provide the assumption that people would be informed in
their decision whether to sign or not.

Moreover, the signature sheet submitted by the Lambino Group to the Court does not
contain the full text of the proposed changes to the Constitution; instead, the signature
sheet merely asks whether the people approve a shift from a Bicameral-Presidential to
a Unicameral-Parliamentary system of government.

The petitioners alleged that they circulated the draft of their 30 August 2006 amended
petition during the signature gathering from February to August 2006, having the Court
believe that they prepared their amended petition almost seven months earlier in
February 2006 and even before they filed their 25 August 2006 petition. While
Aumentado gives as evidence ULAP Resolution No. 2006-02, as proof that the
amended petition was circulated six months before the petitions were filed, ULAP
Resolution No. 2006-02 does not authorize petitioner Aumentado to prepare the
petitions, rather, it only states that ULAP “supports the proposals of the Consultative
Commission on Charter Change” which are vastly different from the proposals of the
Lambino Group, thus the ULAP Resolution does not establish that the Lambino Group
circulated the draft of the petition.

There is inconsistency in the story of the Lambino Group as it was first stated that they
circulated both the 25 August 2006 petion and the 30 August 2006 amended petion;
however, Atty. Lambino later changed the story stating that only the amended petition
was circulated.

Even with the assumption that the amended petition was indeed circulated while the
signatures were being gathered it could still be concluded that there would not be
enough copies of the petition for all the signatories to see. As per Atty. Lambino’s own
admission only 100,000 copies could be confirmed to have been printed as these were
printed by Lambino himself. Assuming that each signature sheet, which had space for
10 signatures, was attached with a copy of the petition, there would be enough copies
for only 1 million people, far from the 6,327,952 signatures gathered by the Lambino
Group.

Having proved that majority of the signatories were not able to see the full text of the of
the proposed changes proposed signing, they could not have known the full nature and
effect of the proposed changes which include three controversial amendments:

 The lifting of term limits on the members of the legislature.

 The interim Parliament will continue to function indefinitely until it decides to call
for parliamentary elections thus enabling its members to determine when they
will end their term.
 Within 45 days after the proposed changes, the interim Parliament will convene
to propose further amendments to the constitution.

This provision is determined by the Court to be totally unrelated to the stated objective
of the initiative and is considered logrolling.

Logrolling refers to the incorporation of an unrelated subject matter in the same petition
thus creating two propositions within one petition thus putting the people in a dilemma
where since they can only say yes or no to the whole petition they cannot agree to one
proposition without also agreeing to the other.

Logrolling confuses and even deceives the people.

While Atty. Lambino states that this provision is not necessary and should thus be
ignored, the Court does not agree since this provision could effectively invalidate the
whole exercise of the people’s initiative as through this provision the interim Parliament
could, in theory, propose amendments not agreed upon by the signatories of the initial
petition.

b. People’s initiative can only be done for constitutional amendments and not revisions.

Based on the deliberations of the Constitutional Commission, the framers intentionally

made a distinction between amendments and revisions. It was the intent, as is written,
that only Congress or a constitutional convention can propose revisions while a
people’s initiative is limited only to the proposal of amendments.
A revision implies a change that alters a basic principle in the constitution while
amendment refers to a change that adds, reduces, or deletes, without altering the
basic principle of the constitution. A change in a single word could already be
considered a revision as long as it overhauls the structure of government and the
ideological basis of the Constitution.
There are two tests to determine whether a change is an amendment or a revision:

 Quantitative test – examines the number of provisions, not the degree of

change, in order to test how extensive the proposed changes are.
 Qualitative test – based on qualitative effects, asks whether the proposed
changes create far reaching changes in the nature of the basic governmental
plan thus amounting to a revision.

The prosed changes by the Lambino Group significantly alter the basic plan of
government as it would effectively alter the separation of powers through the abolition
of the Office of the President and merging of the legislative and executive, and alter
the system of checks and balances within the legislature through the abolition of one
chamber of Congress.

Under both quantitative and qualitative tests, the Lambino Group’s proposed changes
constitute a revision and not simply an amendment as it “radically alters the framework
of government set forth in the Constitution.

The Court states that since the proposed changes constitute a revision and would
require far-reaching amendments in not just the specified articles and provisions but
also in several others, a deliberative body with recorded proceedings would be the
best vehicle to undertake them, as was intended by the framers and is stated in the
constitution, and not a people’s initiative.

2. There is no need to revisit the Court’s ruling in Santiago since an affirmation

or reversal of the said ruling would not change the outcome of this petition.

Even if it is assumed RA 6735 is valid, contrary to the ruling in Santiago, the outcome
of the Lambino Group’s petition would not change since before referring to RA 6735 a
petition must first comply with Section 2, Article XVII, and as was previously
established, it does not.

The Lambino Group’s petition also does not comply with RA 6735. Indeed, It violates
Section 5(b) of RA 6735 requiring that the signatories, consistitng of 12% of the total
number of registered voters, sign the petition since it has already been established that
the 6 million signatories only signed a signature sheet and not the petition itself.

It also violates Section 10(a) of RA 6735, which states that no more than 1 subject can
be embraced by a petition, through its provision which mandates the interim
Parliament to propose further amendments which as determined earlier is unrelated to
the subject of a shift from presidential to parliamentary form of government.

3. The COMELEC did not commit a grave of abuse of discretion in dismissing

the Lambino Group’s Initiative petition.

Since the COMELEC merely followed the Court’s ruling in Santiago, the Commission
did not gravely abuse its discretion.