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EN

BANC
[G.R. No. L-2855. July 30, 1949.]

BORIS MEJOFF, petitioner, vs. DIRECTOR OF PRISONS, respondent.
The petitioner in his own behalf.
First Assistant Solicitor General Roberto A. Gianzon and Solicitor Lucas Lacson for respondent.

SYLLABUS

1. ALIEN; DEPORTATION; HABEAS CORPUS; UNLESS ALIEN CANNOT BE DEPORTED OR IS BEING
INDEFINITELY IMPRISONED, WRIT WILL NOT ISSUE; DOCTRINE REITERATED (BOROVSKY vs. COMMISSIONER
IMMIGRATION ET AL., G.R. No. L-2852). Unless it is shown that deportee is being indefinitely imprisoned under
the pretense of awaiting a chance for deportation or unless the Government admits that it can not deport him or
unless the detainee is being held for too long a period our courts will not interfere.
2. ID.; ID.; ID.; DELAY OF TWENTY MONTHS IN CARRYING OUT ORDER OF DEPORTATION DOES NOT
JUSTIFY ISSUANCE OF WRIT. A delay of twenty months in carrying out an order of deportation has not been held
sufficient to justify the issuance of the writ of habeas corpus.

D E C I S I O N

BENGZON, J p:
The petitioner Boris Mejoff is an alien of Russian descent who was brought to this country from Shanghai as
a secret operative by the Japanese forces during the latter's regime in these Islands. Upon liberation he was arrested
as a Japanese spy, by U. S. Army Counter Intelligence Corps. Later he was handed to the Commonwealth Government
for disposition in accordance with Commonwealth Act No. 682. Thereafter the People's Court ordered his release.
But the deportation board taking his case up, found that having no travel documents Mejoff was illegally in this
country, and consequently referred the matter to the immigration authorities. After the corresponding investigation,
the Board of Commissioners of Immigration on April 5, 1948, declared that Mejoff had entered the Philippines
illegally in 1944, without inspection and admission by the immigration officials at a designated port of entry and,
therefore, it ordered that he be deported on the first available transportation to Russia. The petitioner was then
under custody, he having been arrested on March 18, 1948. In May, 1948, he was transferred to the Cebu Provincial
Jail together with three other Russians to await the arrival of some Russian vessels. In July and August of that year
two boats of Russian nationality called at the Cebu Port. But their masters refused to take petitioner and his
companions alleging lack of authority to do so. In October, 1948, after repeated failures to ship this deportee abroad,
the authorities removed him to Bilibid Prison at Muntinglupa where he has been confined up to the present time,
inasmuch as the Commissioner of Immigration believes it is for the best interests of the country to keep him under
detention while arrangements for his deportation are being made.
It is contended on behalf of petitioner that having been brought to the Philippines legally by the Japanese
forces, he may not now be deported. It is enough to say that the argument would deny to this Government the power
and the authority to eject from the Islands any and all of the members of the Nipponese Army of occupation who
may still be found hiding in remote places. Which is absurd.
Petitioner likewise contends that he may not be deported, because the statutory period to do that under the
laws has long expired. The proposition has no basis. Under section 37 of the Philippine Immigration Act of 1940 any
alien who enters this country "without inspection and admission by the immigration authorities at a designated port
of entry" is subject to deportation within five years.
In a recent decision of a similar litigation (Borovsky vs. Commissioner of Immigration) we denied the
request for habeas corpus, saying:
"It must be admitted that temporary detention is a necessary step in the process of exclusion or expulsion of
undesirable aliens and that pending arrangements for his deportation, the Government has the right to hold the
undesirable alien under confinement for a reasonable length of time. However, under established precedents, too
long a detention may justify the issuance of a writ of habeas corpus. 1
"The meaning of 'reasonable time' depends upon the circumstances, specially the difficulties of obtaining a
passport, the availability of transportation, the diplomatic arrangements with the governments concerned and the
efforts displayed to send the deportee away. 2 Considering that this Government desires to expel the alien, and does
not relish keeping him at the people's expense, we must presume it is making efforts to carry out the decree of
exclusion by the highest officer of the land. On top of this presumption assurances were made during the oral
argument that the Government is really trying to expedite the expulsion of this petitioner. On the other hand, the
record fails to show how long he has been under confinement since the last time he was apprehended. Neither does

he indicate neglected opportunities to send him abroad. And unless it is shown that the deportee is being
indefinitely imprisoned under the pretense of awaiting a chance for deportation 3 or unless the Government admits
that it can not deport him 4 or unless the detainee is being held for too long a period our courts will not interfere.
"In the United States there were at least two instances in which courts fixed a time limit within which the
imprisoned aliens should be deported 5otherwise their release would be ordered by writ of habeas corpus.
Nevertheless, supposing such precedents apply in this jurisdiction, still we have no sufficient data fairly to fix a
definite deadline."
The difference between this and the Borovsky case lies in the fact that the record shows this petitioner has
been detained since March, 1948. However, considering that in the United States (where transportation facilities are
much greater and diplomatic arrangements are easier to make) a delay of twenty months in carrying out an order of
deportation has not been held sufficient to justify the issuance of the writ of habeas corpus, 6 this petition must be,
and it is hereby denied. So ordered.
Moran, C.J., Ozaeta, Padilla, Montemayor and Reyes, JJ., concur.

Separate Opinions
PARAS, J.:
I dissent for the same reasons stated in my dissenting opinion in case No. L-2852.
FERIA, J.:
I dissent on the same ground stated in my dissent in case G.R. No. L-2852.
PERFECTO, J., dissenting:
To continue keeping petitioner under confinement is a thing that shocks conscience. Under the
circumstances, petitioner is entitled to be released from confinement. He has not been convicted for any offense for
which he may be imprisoned. Government's inability to deport him is no pretext to keep him imprisoned for an
indefinite length of time. The constitutional guarantee that no person shall be deprived of liberty without due
process of law has been intended to protect all inhabitants or residents who may happen to be under the shadows of
the Philippine flag.
Our vote is the same as the one we cast when the case of Borovsky vs. Commissioner of Immigration, L-2852,
was submitted for decision although, for some misunderstanding, our vote was overlooked at the time the decision was
promulgated. Our vote is to grant the petition and to order the immediate release of petitioner, without prejudice for
the government to deport him as soon as the government could have the means to do so. In the meantime, petitioner is
entitled to live a normal life in a peaceful country, ruled by the principles of law and justice.
TUASON, J.:
I dissent on the same ground stated in my dissent in case No. L-2852.
Footnotes
1.Wong Wing vs. U. S., 163 U. S., 228; Administrative Control of Aliens by Van Vleck p. 184, citing Chumura vs. Smith, 29
Fed. (2d), 287, and Ex parte Mathews, 277 Fed., 857.
2.Cf. Clark, Deportation of Aliens p. 423; Van Vleck op. cit. p. 183 et seq., Rose vs. Wallis, 279 Fed., 401.
3.Rose vs. Wallis, supra.
4.Bonder vs. Johnson, 5 Fed. (2d), 238.
5.Two months, Caranica vs. Nagle, 28 Fed. (2d), 955; four months, Rose vs. Wallis, supra.
6.Rose vs. Wallis, 279 Fed., 401. May 1920 to January 1922.
||| (Mejoff v. Director of Prisons, G.R. No. L-2855, [July 30, 1949])

EN BANC
[G.R. No. L-4254. September 26, 1951.]

BORIS MEJOFF, petitioner, vs. THE DIRECTOR OF PRISONS, respondent.

Ambrosio T. Dollete, for petitioner.
First Assistant Solicitor General Roberto A. Gianzon and Solicitor Florencio Villamor, for respondents.

SYLLABUS

1. ALIENS; DEPORTATION; HABEAS CORPUS. A foreign national, not enemy, against whom no criminal
charges have been formally made ore judicial order issued, may not indefinitely be kept in detention. He also has the
right to life and liberty and all other fundamental rights as applied to human beings, as proclaimed in the "Universal
Declaration of Human Rights" approved by the General Assembly of the United Nations, which the Philippines is a
member. The theory on which the court is given power to act is that the warrant for his deportation, which was not

executed, is functus officio and the alien is being held without any authority of law (U.S. vs. Nichols, 47 Fed. Sup., 201).
The possibility that he might join or aid disloyal elements if turned out at large does not justify prolonged detention, the
remedy in that case being to impose conditions in the order of release and exact bail in a reasonable amount with
sufficient sureties.

D E C I S I O N

TUASON, J p:

This is a second petition for habeas corpus by Boris Mejoff, the first having been denied in a decision of this
Court of July 30, 1949. The history of the petitioner's detention was thus briefly set forth in that decision, written by
Mr. Justice Bengzon:
"The petitioner Boris Mejoff is an alien of Russian descent who was brought to this country
from Shanghai as a secret operative by the Japanese forces during the latter's regime in these Islands.
Upon liberation he was arrested as a Japanese spy, by U. S. Army Counter Intelligence Corps. Later he
was handed to the Commonwealth Government for disposition in accordance with Commonwealth
Act No. 682. Thereafter the People's Court ordered his release. But the Deportation Board taking his
case up, found that having no travel documents Mejoff was illegally in this country, and consequently
referred the matter to the immigration authorities. After the corresponding investigation, the Board
of Commissioners of Immigration on April 5, 1948, declared that Mejoff had entered the Philippines
illegally in 1944, without inspection and admission by the immigration officials at a designation port
of entry and, therefore, it ordered that he be deported on the first available transportation to Russia.
The petitioner was then under custody, he having been arrested on March 18, 1948. In May 1948 he
was transferred to the Cebu Provincial Jail together with three other Russians to await the arrival of
some Russian vessels. In July and August of that year two boats of Russian nationality called at the
Cebu Port. But their masters refused to take petitioner and his companions alleging lack of authority
to do so. In October 1948 after repeated failures to ship this deportee abroad, the authorities
removed him to Bilibid Prison at Muntinglupa where he has been confined up to the present time,
inasmuch as the Commissioner of Immigration believes it is for the best interests of the country to
keep him under detention while arrangements for his departure are being made."
The Court held the petitioner's detention temporary and said that "temporary detention is a necessary step
in the process of exclusion or expulsion of undersirable aliens and that pending arrangements for his deportation,
the Government has the right to hold the undersirable alien under confinement for a reasonable length of time." It
took note of the fact, manifested by the Solicitor General's representative in the course of the oral argument, that
"this Government desires to expel the alien, and does not relish keeping him at the people's expense . . . making
efforts to carry out the decree of exclusion by the highest officer of the land." No period was fixed within which the
immigration authorities should carry out the contemplated deportation beyond the statement that "The meaning of
'reasonable time' depends upon the circumstances, specially the difficulties of obtaining a passport, the availability
of transportation, the diplomatic arrangements with the governments concerned and the efforts displayed to send
the deportee away;" but the Court warned that "under established precedents, too long a detention may justify the
issuance of a writ of habeas corpus."
Mr. Justice Paras, now Chief Justice, Mr. Justice Feria, Mr. Justice Perfecto, and the writer of this decision
dissented. Mr. Justice Feria and Mr. Justice Perfecto voted for outright discharge of the prisoner from custody. Mr.
Justice Paras qualified his dissent by stating that he might agree "to a further detention of the herein petitioner,
provided that he be released if after six months, the Government is still unable to deport him." This writer joined in
the latter dissent but thought that two months constituted reasonable time.
Over two years having elapsed since the decision aforesaid was promulgated, the Government has not
found ways and means of removing the petitioner out of the country, and none are in sight, although, it should be
said in justice to the deportation authorities, it was through no fault of theirs that no ship or country would take the
petitioner.
Aliens illegally staying in the Philippines have no right of asylum therein (Soewapadji vs. Wixon, Sept. 18,
1946, 157 F. ed., 289, 290), even if they are "stateless," which the petitioner claims to be. It is no less true however,
as impliedly stated in this Court's decision, supra, that foreign nationals, not enemy, against whom no charge has
been made other than that their permission to stay has expired, may not indefinitely be kept in detention. The
protection against deprivation of liberty without due process of law and except for crimes committed against the
laws of the land is not limited to Philippine citizens but extends to all residents, except enemy aliens, regardless of
nationality. Whether an alien who entered the country in violation of its immigration laws may be detained for as
long as the Government is unable to deport him, is a point we need not decide. The petitioner's entry into the

Philippines was not unlawful; he was brought by the armed and belligerent forces of a de facto government whose
decrees were law during the occupation.
Moreover, by its Constitution (Art. II, Sec. 3) the Philippines "adopts the generally accepted principles of
international law as part of the law of Nation." And in a resolution entitled "Universal Declaration Of Human Rights"
and approved by the General Assembly of the United Nations of which the Philippines is a member, at its plenary
meeting on December 10, 1948, the right to life and liberty and all other fundamental rights as applied to all human
beings were proclaimed. It was there resolved that "All human beings are born free and equal in degree and rights"
(Art. 1); that "Everyone is entitled to all the rights and freedom set forth in this Declaration, without distinction of
any kind, such as race, colour, sex, language, religion, political or other opinion, nationality or social origin, property,
birth, or other status" (Art. 2); that "Every one has the right to an effective remedy by the competent national
tribunals for acts violating the fundamental rights granted him by the Constitution or by law" (Art. 8); that "No one
shall be subjected to arbitrary arrest, detention or exile" (Art. 9 ); etc.
In U. S. vs. Nichols, 47 Fed. Supp., 201, it was said that the court "has the power to release from custody an alien
who has been detained an unreasonably long period of time by the Department of Justice after it has become apparent
that although a warrant for his deportation has been issued, the warrant can not be effectuated;" that "the theory on
which the court is given the power to act is that the warrant of deportation, not having been able to be executed,
is functus officio and the alien is being held without any authority of law." The decision cited several cases which, it
said, settled the matter definitely in that jurisdiction, adding that the same result had been reached in innumerable
cases elsewhere. The cases referred to were United States ex rel. Ross vs. Wallis, 2 Cir. 279 F. 401, 404; Caranica vs.
Nagle, 9 Cir., 28 F. 2d 955; Saksagansky vs. Weedin, 9 Cir., 53 F. 2d 13, 16 last paragraph; Ex parte Matthews, D.C.W.D.
Wash., 277 F. 857; Moraitis vs. Delany, D.C. Md. Aug. 28, 1942, 46 F. Supp. 425.
The most recent case, as far as we have been able to find, was that of Staniszewski vs. Watkins (1948), 80
Fed. Supp., 132, which is nearly foursquare with the case at hand. In that case a stateless person, formerly a Polish
national, resident in the United States since 1911 and many times serving as a seaman on American vessels both in
peace and in war, was ordered excluded from the United States and detained at Ellis Island at the expense of the
steamship company, when he returned from a voyage on which he had shipped from New York for one or more
European ports and return to the United States. The grounds for his exclusion were that he had no passport or
immigration visa, and that in 1937 had been convicted of perjury because in certain documents he represented himself
to be an American citizen. Upon his application for release on habeas corpus, the Court released him upon his own
recognizance. Judge Leibell, of the United States District Court for the Southern District of New York, said in part:
"When the return to the writ of habeas corpus came before this court, I suggested that all
interested parties . . . make an effort to arrange to have the petitioner ship out of some country that
would receive him as a resident. He is a native-born Pole but the Polish Consul has advised him in
writing that he is no longer a Polish subject. This Government does not claim that he is a Polish
citizen. This attorney says he is stateless. The Government is willing that he go back to the ship, but if
he were sent back aboard ship and sailed to the Port (Cherbourg, France) from which he last sailed to
the United States, he would probably be denied permission to land. There is no other country that
would take him, without proper documents.

"It seems to me that this is a genuine hardship case and that the petitioner should be released
from custody on proper terms . . ..
"What is to be done with the petitioner? The government has had him in custody almost
seven months and practically admits it has no place to send him out of this country. The steamship
company, which employed him as one of a group sent to the ship by the Union, with proper seaman's
papers issued by the United States Coast Guard, is paying $3 a day for petitioner's board at Ellis
Island. It is no fault of the steamship company that petitioner is an inadmissible alien as the
immigration officials describe him . . ..
"I intend to sustain the writ of habeas corpus and order the release of the petitioner on his
own recognizance. He will be required to inform the immigration officials at Ellis Island by mail on
the 15th of each month, stating where he is employed and where he can be reached by mail. If the
government does succeed in arranging for petitioner's deportation to a country that will be ready to
receive him as a resident, it may then advise the petitioner to that effect and arrange for his
deportation in the manner provided by law."
Although not binding upon this Court as a precedent, the case aforecited affords a happy solution to the
quandary in which the parties here find themselves, solution which we think is sensible, sound and compatible with
law and the Constitution. For this reason, and since the Philippine law on immigration was patterned after or copied
from the American law and practice, we choose to follow and adopt the reasoning and conclusions in the

Staniszewski decision with some modifications which, it is believed, are in consonance with the prevailing
conditions of peace and order in the Philippines.
It was said or insinuated at the hearing of the petition at bar, but not alleged in the return, that the
petitioner was engaged in subversive activities, and fear was expressed that he might join or aid the disloyal
elements if allowed to be at large. Bearing in mind the Government's allegation in its answer that "the herein
petitioner was brought to the Philippines by the Japanese forces," and the fact that Japan is no longer at war with the
United States or the Philippines nor identified with the countries allied against these nations, the possibility of the
petitioner's entertaining or committing hostile acts prejudicial to the interest and security of this country seems
remote.
If we grant, for the sake of argument, that such a possibility exists, still the petitioner's unduly prolonged
detention would be unwarranted by law and the Constitution, if the only purpose of the detention be to eliminate a
danger that is by no means actual, present, or uncontrolable. After all, the Government is not impotent to deal with
or prevent any threat by such measure as that just outlined. The thought eloquently expressed by Mr. Justice Jackson
of the United States Supreme Court in connection with the application for bail of ten Communists convicted by a
lower court of advocacy of violent overthrow of the United States Government is, in principle, pertinent and may be
availed of at this juncture. Said the learned Jurist:
"The Government's alternative contention is that defendants, by misbehavior after
conviction, have forfeited their claim to bail. Grave public danger is said to result from what they may
be expected to do, in addition to what they have done since their conviction. If I assume that
defendants are disposed to commit every opportune disloyal act helpful to Communist countries, it is
still difficult to reconcile with traditional American law the jailing of persons by the courts because of
anticipated but as yet uncommitted crimes. Imprisonment to protect society from predicted but
unconsummated offenses is so unprecedented in this country and so fraught with danger of excesses
and injustice that I am loath to resort to it, even as a discretionary judicial technique to supplement
conviction of such offenses as those of which defendants stand convicted.
xxx xxx xxx
"But the right of every American to equal treatment before the law is wrapped up in the same
constitutional bundle with those of these Communists. If in anger or disgust with these defendants we
throw out the bundle, we also cast aside protection for the liberties of more worthy critics who may
be in opposition to the government of some future day.
xxx xxx xxx
"If, however, I were to be wrong on all of these abstract or theoretical matters of principle,
there is a very practical aspect of this application which must not be overlooked or underestimated
that is the disastrous effect on the reputation of American justice if I should now send these men to
jail and the full Court later decide that their conviction is invalid. All experience with litigation teaches
that existence of a substantial question about a conviction implies a more than negligible risk of
reversal. Indeed this experience lies hack of our rule permitting and practice of allowing bail where
such questions exist, to avoid the hazard of unjustifiably imprisoning persons with consequent
reproach to our system of justice. If that is prudent judicial practice in the ordinary case, how much
more important to avoid every chance of handing to the Communist world such an ideological
weapon as it would have if this country should imprison this handful of Communist leaders on a
conviction that our own highest Court would confess to be illegal. Risks, of course, are involved in
either granting or refusing bail. I am not naive enough to underestimate the troublemaking
propensities of the defendants. But, with the Department of Justice alert to the dangers, the worst
they can accomplish in the short time it will take to end the litigation is preferable to the possibility of
national embarrassment from a celebrated case of unjustified imprisonment of Communist leaders.
Under no circumstances must we permit their symbolization of an evil force in the world to be
hallowed and glorified by any semblance of martyrdom. The way to avoid that risk is not to jail these
men until it is finally decided that they should stay jailed."
If that case is not comparable with ours on the issues presented, its underlying principle is of universal
application. In fact, its ratio decidendiapplies with greater force to the present petition, since the right of accused to
bail pending appeal of his case, as in the case of the ten Communists, depends upon the discretion of the court,
whereas the right to be enlarged before formal charges are instituted is absolute. As already noted, not only are
there no charges pending against the petitioner, but the prospects of bringing any against him are slim and remote.
Premises considered, the writ will issue commanding the respondents to release the petitioner from
custody upon these terms: The petitioner shall be placed under the surveillance of the immigration authorities or
their agents in such form and manner as may be deemed adequate to insure that he keep peace and be available
when the Government is ready to deport him. The surveillance shall be reasonable and the question of

reasonableness shall be submitted to this Court or to the Court of First Instance of Manila for decision in case of
abuse. He shall also put up a bond for the above purpose in the amount of P5,000 with sufficient surety or sureties,
which bond the Commissioner of Immigration is authorized to exact by section 40 of Commonwealth Act No. 613.
No costs will be charged.
Paras, C.J., Feria, Bengzon, Padilla, Reyes and Jugo, JJ., concur.

Separate Opinions
PABLO, M., disidente:
||| (Mejoff v. Director of Prisons, G.R. No. L-4254, [September 26, 1951], 90 PHIL 70-83)

EN BANC
[G.R. No. 118295. May 2, 1997.]

WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate
and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the House of
Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both as
taxpayers: CIVIL LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM ASSOCIATION,
CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN
FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT, DEMOKRATIKONG
KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in
representation of various taxpayers and as non-governmental organizations, petitioners, vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON ALVAREZ,
AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO HERRERA, JOSE LINA,
GLORIA MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA
RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their respective
capacities as members of the Philippine Senate who concurred in the ratification by the
President of the Philippines of the Agreement Establishing the World Trade Organization;
SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget and Management; CARIDAD
VALDEHUESA, in her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as
Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary of
Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary of Finance; ROBERTO ROMULO,
in his capacity as Secretary of Foreign Affairs; and TEOFISTO T. GUINGONA, in his capacity as
Executive Secretary, respondents.

Abelardo T . Domondon for petitioners.
The Solicitor General for respondents.

SYLLABUS

1.REMEDIAL LAW; ACTIONS; ESTOPPEL, SUBJECT TO WAIVER. The matter of estoppel will not be taken up because
this defense is waivable and the respondents have effectively, waived it by not pursuing it in any of their pleadings; in
any event, this issue, even if ruled in respondents' favor, will not cause the petition's dismissal as there are petitioners
other than the two senators, who are not vulnerable to the defense of estoppel.
2.ID.; ID.; PARTIES; LOCUS STANDI; SUBJECT TO WAIVER. During its deliberations on the case, the Court noted that
the respondents did not question thelocus standi of petitioners. Hence, they are also deemed to have waived the benefit
of such issue. They probably realized that grave constitutional issues, expenditures of public funds and serious
international commitments of the nation are involved here, and that transcendental public interest requires that the
substantive issues be met head on and decided on the merits, rather than skirted or deflected by procedural matters.
3.ID.; ID.; PETITION SEEKING TO NULLIFY ACT OF SENATE ON GROUND THAT IT CONTRAVENES THE CONSTITUTION,
A JUSTICIABLE QUESTION. In seeking to nullify an act of the Philippine Senate on the ground that it contravenes
the Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is
seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to
settle the dispute. "The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure
that the supremacy of theConstitution is upheld." Once a "controversy as to the application or interpretation of a
constitutional provision is raised before this Court (as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide."
4.ID.; SUPREME COURT; JUDICIAL POWER; SCOPE. The jurisdiction of this Court to adjudicate the matters raised in
the petition is clearly set out in the 1987Constitution, as follows: "Judicial power includes the duty of the courts of justice

to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality, of the government." The foregoing text emphasizes the judicial department's duty and power to strike
down grave abuse of discretion on the part of any branch or instrumentality, of government including Congress. It is an
innovation in our political law. As explained by former Chief Justice Roberto Concepcion, "the judiciary is the final
arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or
in excess of jurisdiction or so capriciously, as to constitute an abuse of discretion amounting to excess of jurisdiction.
This is not only a judicial power but a duty to pass judgment on matters of this nature." As this Court has repeatedly and
firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold
the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by
any officer, agency, instrumentality or department of the government.
5.ID.; SPECIAL CIVIL ACTIONS; CERTIORARI, PROHIBITION AND MANDAMUS; APPROPRIATE REMEDIES TO REVIEW
ACTS OF LEGISLATIVE AND EXECUTIVE OFFICIALS. Certiorari, prohibition and mandamus are appropriate remedies
to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive
officials.
6.POLITICAL LAW; CONSTITUTION; DECLARATION OF PRINCIPLES AND STATE POLICIES; AIDS OR GUIDES IN THE
EXERCISE OF JUDICIAL AND LEGISLATIVE POWERS. By its very title, Article II of the Constitution is a "declaration of
principles and state policies." The counterpart of this article in the 1935Constitution is called the "basic political creed of
the nation" by Dean Vicente Sinco. These principles in Article II are not intended to be self-executing principles ready for
enforcement through the courts. They are used by the judiciary as aids or as guides in the exercise of its power of judicial
review, and by the legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated vs. Morato,
the principles and state policies enumerated in Article II and some sections of Article XII are not "self-executing
provisions, the disregard of which can give rise to a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation."
7.ID.; ID.; THOUGH IT MANDATES A BIAS IN FAVOR OF FILIPINO GOODS, SERVICES, LABOR AND ENTERPRISES, IT
RECOGNIZES THE NEED FOR BUSINESS EXCHANGE WITH THE REST OF THE WORLD. While 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.
8.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; JOINING THE WORLD TRADE ORGANIZATION, NOT A GRAVE
ABUSE OF DISCRETION. The basic principles underlying the WTO Agreement recognize the need of developing
countries like the Philippines to "share in the growth in international tradecommensurate with the needs of their
economic development." GATT has provided built-in protection from unfair foreign competition and trade practices
including anti-dumping measures, countervailing measures and safeguards against import surges. Where local
businesses are jeopardized by unfair foreign competition, the Philippines can avail of these measures. There is hardly
therefore any basis for the statement that under the WTO, local industries and enterprises will all be wiped out and that
Filipinos will be deprived of control of the economy. Quite the contrary, the weaker situations of developing nations like
the Philippines have been taken into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the
yet uncharted sea of economic liberalization. But such decision cannot be set aside on the ground of grave abuse of
discretion simply because we disagree with it or simply because we believe only in other economic policies. As earlier
stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade
liberalization as an economic policy. It will only, perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion.
9.POLITICAL LAW; CONSTITUTION; DECLARATION OF PRINCIPLES AND STATE POLICIES; POLICY OF "SELF-RELIANT
AND INDEPENDENT NATIONAL ECONOMY" DOES NOT RULE OUT ENTRY OF FOREIGN INVESTMENTS, GOODS AND
SERVICES. The 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."
10.POLITICAL LAW; INTERNATIONAL LAW; WORLD TRADE LAW ORGANIZATION/GENERAL AGREEMENT ON TARIFFS
AND TRADE; RELIANCE ON "MOST FAVORED NATIONS", CONSTITUTIONAL. 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 reciprocal", 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.

11.REMEDIAL LAW; ACTIONS; QUESTIONS INVOLVING "JUDGMENT CALLS", NOT SUBJECT TO JUDICIAL REVIEW.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality? Will WTO/GATT succeed in
promoting the Filipinos' general welfare because it will as promised by its promoters expand the country's exports
and generate more employment? Will it bring more prosperity, employment, purchasing power and quality products at
the most reasonable rates to the Filipino public? The responses to these questions involve "judgment calls" by our policy
makers, for which they are answerable to our people during appropriate electoral exercises. Such questions and the
answers thereto are not subject to judicial pronouncements based on grave abuse of discretion.
12.POLITICAL LAW; SOVEREIGNTY; SUBJECT TO RESTRICTIONS AND LIMITATIONS VOLUNTARILY AGREED TO BY THE
STATE; CASE AT BAR. While sovereignty has traditionally been deemed absolute and all-encompassing on the
domestic level, it is however subject to restrictions and limitations voluntarily agreed to by the Philippines, expressly or
impliedly, as a member of the family of nations. In its Declaration of Principles and State Policies,
theConstitution "adopts the generally accepted principles of international law as part of the law of the land, and adheres
to the policy of peace, equality, justice, freedom, cooperation and amity, with all nations." By the doctrine of
incorporation, the country is bound by generally accepted principles of international law, which are considered to be
automatically part of our own laws. One of the oldest and most fundamental rules in international law is pacta sunt
servanda international agreements must be performed in good faith. "A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties . . . A state which has contracted valid international
obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the
obligations undertaken."
13.ID.; ID.; ID.; ID. When the Philippines joined the United Nations as one of its 51 charter members, it consented to
restrict its sovereign rights under the "concept of sovereignty as auto-limitation." Under Article 2 of the UN Charter,
"(a)ll members shall give the United Nations every assistance in any action it takes in accordance with the present
Charter, and shall refrain from giving assistance to any state against which the United Nations is taking preventive or
enforcement action." Apart from the UN Treaty, the Philippines has entered into many other international pacts both
bilateral and multilateral that involve limitations on Philippine sovereignty the Philippines has effectively agreed to
limit the exercise of its sovereign powers of taxation, eminent domain and police power. The underlying consideration in
this partial surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the same
privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes the
Philippine commitments under WTO-GATT. The point is that, as shown by the foregoing treaties, a portion of
sovereignty may be waived without violating the Constitution, based on the rationale that the Philippines "adopts the
generally accepted principles of international law as part of the law of the land and adheres to the policy of . . .
cooperation and amity with all nations."
14.ID.; ID.; ID.; WORLD TRADE ORGANIZATION; PARAGRAPH 1, ARTICLE 34 OF THE GENERAL PROVISIONS AND BASIC
PRINCIPLES OF THE AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS);
DOES NOT INTRUDE ON THE POWER OF THE SUPREME COURT TO PROMULGATE RULES ON PLEADING, PRACTICE
AND PROCEDURES. Petitioners aver that paragraph 1, Article 34 (Process Patents: Burden of Proof) of the General
Provisions and Basic Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
intrudes on the power of the Supreme Court to promulgate rules concerning pleading, practice and procedures. A WTO
Member is required to provide a rule of disputable (note the words "in the absence of proof to the contrary")
presumption that a product shown to be identical to one produced with the use of a patented process shall be deemed to
have been obtained by the (illegal) use of the said patented process, (1) where such product obtained by the patented
product is new, or (2) where there is "substantial likelihood" that the identical product was made with the use of the said
patented process but the owner of the patent could not determine the exact process used in obtaining such identical
product. Hence, the "burden of proof" contemplated by Article 34 should actually be understood as the duty of the
alleged patent infringer to overthrow such presumption. Such burden, properly understood, actually refers to the
"burden of evidence" (burden of going forward) placed on the producer of the identical (or fake) product to show that
his product was produced without the use of the patented process. The foregoing notwithstanding, the patent owner still
has the "burden of proof" since, regardless of the presumption provided under paragraph 1 of Article 34, such owner
still has to introduce evidence of the existence of the alleged identical product, the fact that it is "identical" to the genuine
one produced by the patented process and the fact of "newness" of the genuine product was made by the patented
process. Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies
only if (1) the product obtained by the patented process is NEW or (2) there is a substantial likelihood that the identical

product was made by the process and the process owner has not been able through reasonable effort to determine the
process used. Where either of these two provisos does not obtain, members shall be free to determine the appropriate
method of implementing the provisions of TRIPS within their own internal systems and processes. By and large, the
arguments adduced in connection with our disposition of the third issue derogation of a legislative power will
apply to this fourth issue also. Suffice it to say that the reciprocity clause more than justifies such intrusion, if any
actually exists. Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due process and the
concept of adversarial dispute settlement inherent in our judicial system. So too, since the Philippine is a signatory to
most international conventions on patents, trademarks and copyrights, the adjustments in legislation and rules of
procedure will not be substantial.
15.ID.; ID.; ID.; ID.; MINISTERIAL DECLARATION AND DECISIONS AND THE UNDERSTANDING ON COMMITMENTS IN
FINANCIAL SERVICES, NOT SUBJECT TO CONCURRENCE BY THE SENATE. "A final act, sometimes called protocol de
cloture, is an instrument which records the winding up of the proceedings of a diplomatic conference and usually
includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed upon and signed by
the plenipotentiaries attending the conference." It is not the treaty itself. It is rather a summary of the proceedings of a
protracted conference which may have taken place over several years. The assailed Senate Resolution No. 97 expressed
concurrence in exactly what the Final Act required from its signatories, namely, concurrence of the Senate in the WTO
Agreement. The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They were
approved by the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of the members can
meet "to give effect to those provision of this Agreement which invoke joint action, and generally with a view to
facilitating the operation and furthering the objectives of this Agreement." The Understanding on Commitments in
Financial Services also approved in Marrakesh does not apply to the Philippines. It applies only to those 27 Members
which "have indicated in their respective schedules of commitments on standstill, elimination of monopoly, expansion of
operation of existing financial service suppliers, temporary entry of personnel, free transfer and processing of
information, and national treatment with respect to access to payment, clearing systems and refinancing available in the
normal course of business."
16.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; RESORT THERETO ON GROUND OF GRAVE ABUSE OF
DISCRETION AVAILABLE ONLY WHERE THERE IS NO PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY
COURSE OF LAW. Procedurally. a writ of certiorari grounded on grave abuse of discretion may be issued by the Court
under Rule 65 of the Rules of Court when it is amply shown that petitioners have no other plain, speedy and adequate
remedy in the ordinary course of law.
17.ID.; ID.; ID.; GRAVE ABUSE OF DISCRETION, CONSTRUED. By grave abuse of discretion is meant such capricious
and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It
must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform the duty, enjoined or to act at all in contemplation of law. Failure on the part of the petitioner
to show grave abuse of discretion will result in the dismissal of the petition.
18.ID.; ID.; ID.; CONCURRENCE BY THE SENATE IN THE WORLD TRADE ORGANIZATION, NOT A GRAVE ABUSE OF
DISCRETION. In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one of
two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a constitutional body
independent and coordinate, and thus its actions are presumed regular and done in good faith. Unless convincing proof
and persuasive arguments are presented to overthrow such presumptions, this Court will resolve every doubt in its
favor. Using the foregoing well-accepted definition of grave abuse of discretion and the presumption of regularity in the
Senate's processes, this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's exercise
of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of theConstitution. 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. Ineludably, 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.


D E C I S I O N


PANGANIBAN, J p:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership thereto of the vast
majority of countries, has revolutionized international business and economic relations amongst states. It has
irreversibly propelled the world towards trade liberalization and economic globalization. Liberalization, globalization,
deregulation and privatization, the third-millennium buzz words, are ushering in a new borderless world of business by
sweeping away as mere historical relics the heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls.
Finding market niches and becoming the best in specific industries in a market-driven and export-oriented global
scenario are replacing age-old "beggar-thy-neighbor" policies that unilaterally protect weak and inefficient domestic
producers of goods and services. In the words of Peter Drucker, the well-known management guru, "Increased
participation in the world economy has become the key to domestic economic growth and prosperity." prll

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the establishment of
three multilateral institutions inspired by that grand political body, the United Nations were discussed at
Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB) which was to address the rehabilitation and
reconstruction of war-ravaged and later developing countries; the second, the International Monetary Fund (IMF) which
was to deal with currency problems; and the third, the International Trade Organization (ITO), which was to foster order
and predictability in world trade and to minimize unilateral protectionist policies that invite challenge, even retaliation,
from other states. However, for a variety of reasons, including its non-ratification by the United States, the ITO, unlike
the IMF and WB, never took off. What remained was only GATT the General Agreement on Tariffs and Trade. GATT
was a collection of treaties governing access to the economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the Tokyo Round and
the Uruguay Round, the world finally gave birth to that administering body the World Trade Organization with the
signing of the "Final Act" in Marrakesh, Morocco and the ratification of the WTO Agreement by its members. 1 1a 1b 1c
Like many other developing countries, the Philippines joined WTO as a founding member with the goal, as articulated by
President Fidel V. Ramos in two letters to the Senate (infra), of improving "Philippine access to foreign markets,
especially its major trading partners, through the reduction of tariffs on its exports, particularly agricultural and
industrial products." The President also saw in the WTO the opening of "new opportunities for the services sector . . .,
(the reduction of) costs and uncertainty associated with exporting . . ., and (the attraction of) more investments into the
country." Although the Chief Executive did not expressly mention it in his letter, the Philippines and this is of special
interest to the legal profession will benefit from the WTO system of dispute settlement by judicial adjudication
through the independent WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal.
Heretofore, trade disputes were settled mainly through negotiations where solutions were arrived at frequently on the
basis of relative bargaining strengths, and where naturally, weak and underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and products of member-countries on the
same footing as Filipinos and local products" and (2) that the WTO "intrudes, limits and/or impairs" the constitutional
powers of both Congress and the Supreme Court, the instant petition before this Court assails the WTO Agreement for
violating 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."
Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade liberalization and
economic globalization? Does it proscribe Philippine integration into a global economy that is liberalized, deregulated
and privatized? These are the main questions raised in this petition for certiorari, prohibition and mandamus under Rule
65 of the Rules of Court praying (1) for the nullification, on constitutional grounds, of the concurrence of the Philippine
Senate in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization
(WTO Agreement, for brevity) and (2) for the prohibition of its implementation and enforcement through the release
and utilization of public funds, the assignment of public officials and employees, as well as the use of government
properties and resources by respondent-heads of various executive offices concerned therewith. This concurrence is
embodied in Senate Resolution No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of the Department of Trade and Industry (Secretary
Navarro, for brevity), representing the Government of the Republic of the Philippines, signed in Marrakesh, Morocco, the
Final Act Embodying the Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act, 2 Secretary Navarro on behalf of the Republic of the Philippines, agreed:
"(a)to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities, with a view to seeking approval of the Agreement in accordance with their
procedures; and
(b)to adopt the Ministerial Declarations and Decisions."
On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994 from the President of
the Philippines, 3 stating among others that "the Uruguay Round Final Act is hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution." cdta
On August 13, 1994, the members of the Philippine Senate received another letter from the President of the
Philippines 4 likewise dated August 11, 1994, which stated among others that "the Uruguay Round Final Act, the
Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services are hereby submitted to the Senate for its concurrence pursuant
to Section 21, Article VII of the Constitution."
On December 9, 1994, the President of the Philippines certified the necessity of the immediate adoption of P.S. 1083, a
resolution entitled "Concurring in the Ratification of the Agreement Establishing the World Trade Organization." 5
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which "Resolved, as it is hereby resolved, that
the Senate concur, as it hereby concurs, in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization." 6 The text of the WTO Agreement is written on pages 137 et seq. of Volume
I of the 36-volume Uruguay Round of Multilateral Trade Negotiations and includes various agreements and associated
legal instruments (identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as
Multilateral Trade Agreements, for brevity) as follows:
"ANNEX I
Annex 1A:Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and Phytosanitary
Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994
Agreement on Implementation of Article VII of the General
on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating Measures
Agreement on Safeguards
Annex 1B:General Agreement on Trade in Services and Annexes
Annex 1C:Agreement on Trade-Related Aspects of Intellectual
Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing the
Settlement of Disputes
ANNEX 3
Trade Policy Review Mechanism"
On December 16, 1994, the President of the Philippines signed 7 the Instrument of Ratification, declaring:
"NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines,
after having seen and considered the aforementioned Agreement Establishing the World Trade
Organization and the agreements and associated legal instruments included in Annexes one (1), two
(2) and three (3) of that Agreement which are integral parts thereof, signed at Marrakesh, Morocco
on 15 April 1994, do hereby ratify and confirm the same and every Article and Clause thereof."

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the Agreement Proper and
"the associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are
integral parts thereof."
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO Agreement (and its integral
annexes aforementioned) but also (1) the Ministerial Declarations and Decisions and (2) the Understanding on
Commitments in Financial Services. In his Memorandum dated May 13, 1996, 8 the Solicitor General describes these two
latter documents as follows:

"The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide
range of matters, such as measures in favor of least developed countries, notification procedures,
relationship of WTO with the International Monetary Fund (IMF), and agreements on technical
barriers to trade and on dispute settlement.
The Understanding on Commitments in Financial Services dwell on, among other things, standstill or
limitations and qualifications of commitments to existing non-conforming measures, market access,
national treatment, and definitions of non-resident supplier of financial services, commercial
presence and new financial service." cdti
On December 29, 1994, the present petition was filed. After careful deliberation on respondents' comment and
petitioners' reply thereto, the Court resolved on December 12, 1995, to give due course to the petition, and the parties
thereafter filed their respective memoranda. The Court also requested the Honorable Lilia R. Bautista, the Philippine
Ambassador to the United Nations stationed in Geneva, Switzerland, to submit a paper, hereafter referred to as "Bautista
Paper," 9 for brevity, (1) providing a historical background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
"(a)the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2)
the transcript of proceedings/hearings in the Senate; and
(b)the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed prior
to the Philippine adherence to the WTO Agreement, which derogate from Philippine sovereignty and
(2) copies of the multi-volume WTO Agreement and other documents mentioned in the Final Act, as
soon as possible."
After receipt of the foregoing documents, the Court said it would consider the case submitted for resolution. In a
Compliance dated September 16, 1996, the Solicitor General submitted a printed copy of the 36-volume Uruguay Round
of Multilateral Trade Negotiations, and in another Compliance dated October 24, 1996, he listed the various "bilateral or
multilateral treaties or international instruments involving derogation of Philippine sovereignty." Petitioners, on the
other hand, submitted their Compliance dated January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:
"A.Whether the petition presents a political question or is otherwise not justiciable.
B.Whether the petitioner members of the Senate who participated in the deliberations and voting
leading to the concurrence are estopped from impugning the validity of the Agreement
Establishing the World Trade Organization or of the validity or of the concurrence.
C.Whether the provisions of the Agreement Establishing the World Trade Organization contravene
the provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of the 1987
Philippine Constitution.
D.Whether provisions of the Agreement Establishing the World Trade Organization unduly limit,
restrict and impair Philippine sovereignty specifically the legislative power which, under Sec.
2, Article VI, 1987 Philippine Constitution is 'vested in the Congress of the Philippines';
E.Whether provisions of the Agreement Establishing the World Trade Organization interfere with the
exercise of judicial power.
F.Whether the respondent members of the Senate acted in grave abuse of discretion amounting to
lack or excess of jurisdiction when they voted for concurrence in the ratification of the
constitutionally-infirm Agreement Establishing the World Trade Organization.
G.Whether the respondent members of the Senate acted in grave abuse of discretion amounting to
lack or excess of jurisdiction when they concurred only in the ratification of the Agreement
Establishing the World Trade Organization, and not with the Presidential submission which
included the Final Act, Ministerial Declaration and Decisions, and the Understanding on
Commitments in Financial Services."

On the other hand, the Solicitor General as counsel for respondents "synthesized the several issues raised by petitioners
into the following": 10
"1.Whether or not the provisions of the 'Agreement Establishing the World Trade Organization and
the Agreements and Associated Legal Instruments included in Annexes one (1), two (2) and three (3)
of that agreement' cited by petitioners directly contravene or undermine the letter, spirit and intent
ofSection 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.
2.Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of
legislative power by Congress.
3.Whether or not certain provisions of the Agreement impair the exercise of judicial power by this
Honorable Court in promulgating the rules of evidence.
4.Whether or not the concurrence of the Senate 'in the ratification by the President of the Philippines
of the Agreement establishing the World Trade Organization' implied rejection of the treaty
embodied in the Final Act."
By raising and arguing only four issues against the seven presented by petitioners, the Solicitor General has effectively
ignored three, namely: (1) whether the petition presents a political question or is otherwise not justiciable; (2) whether
petitioner-members of the Senate (Wigberto E. Taada and Anna Dominique Coseteng) are estopped from joining this
suit; and (3) whether the respondent-members of the Senate acted in grave abuse of discretion when they voted for
concurrence in the ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus: cdt
(1)The "political question" issue being very fundamental and vital, and being a matter that probes into the very
jurisdiction of this Court to hear and decide this case was deliberated upon by the Court and will thus be ruled upon
as the first issue;
(2)The matter of estoppel will not be taken up because this defense is waivable and the respondents have effectively
waived it by not pursuing it in any of their pleadings; in any event, this issue, even if ruled in respondents' favor, will not
cause the petition's dismissal as there are petitioners other than the two senators, who are not vulnerable to the defense
of estoppel; and
(3)The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an integral
part of the disposition of the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not question the locus standi of petitioners.
Hence, they are also deemed to have waived the benefit of such issue. They probably realized that grave constitutional
issues, expenditures of public funds and serious international commitments of the nation are involved here, and that
transcendental public interest requires that the substantive issues be met head on and decided on the merits, rather
than skirted or deflected by procedural matters. 11
To recapitulate, the issues that will be ruled upon shortly are:
(1)DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE
PETITION INVOLVE A POLITICAL QUESTION OVER WHICH THIS COURT HAS NO
JURISDICTION?
(2)DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES CONTRAVENE SEC.
19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?
(3)DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE
EXERCISE OF LEGISLATIVE POWER BY CONGRESS?
(4)DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL
POWER BY THIS COURT IN PROMULGATING RULES ON EVIDENCE?
(5)WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES
SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT INCLUDE THE FINAL ACT,
MINISTERIAL DECLARATIONS AND DECISIONS, AND THE UNDERSTANDING ON
COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no
doubt raises a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed
the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. "The question
thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy of
theConstitution is upheld." 12 Once a "controversy as to the application or interpretation of a constitutional provision is
raised before this Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional
mandate to decide." 13
The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly set out in the
1987 Constitution, 15 as follows:

"Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government."
The foregoing text emphasizes the judicial department's duty and power to strike down grave abuse of discretion on the
part of any branch or instrumentality of government including Congress. It is an innovation in our political law. 16 As
explained by former Chief Justice Roberto Concepcion, 17 "the judiciary is the final arbiter on the question of whether or
not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so
capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power
but a duty to pass judgment on matters of this nature."

As this Court has repeatedly and firmly emphasized in many cases, 18 it will not shirk, digress from or abandon its
sacred duty and authority to uphold theConstitution in matters that involve grave abuse of discretion brought before it
in appropriate cases, committed by any officer, agency, instrumentality or department of the government. LibLex
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate remedy in the
ordinary course of law, we have no hesitation at all in holding that this petition should be given due course and the vital
questions raised therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus
are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of
legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not review the wisdom of the
decision of the President and the Senate in enlisting the country into the WTO, or pass upon the merits of trade
liberalization as a policy espoused by said international body. Neither will it rule on the propriety of the government's
economic policy of reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other import/trade
barriers. Rather, it will only exercise its constitutional duty "to determine whether or not there had been a grave abuse
of discretion amounting to lack or excess of jurisdiction" on the part of the Senate in ratifying the WTO Agreement and
its three annexes.
Second Issue: The WTO Agreement and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution mandating "economic nationalism" are
violated by the so-called "parity provisions" and "national treatment" clauses scattered in various parts not only of the
WTO Agreement and its annexes but also in the Ministerial Decisions and Declarations and in the Understanding on
Commitments in Financial Services.
Specifically, the "flagship" constitutional provisions referred to are Sec. 19, Article II, and Secs. 10 and 12, Article XII, of
the Constitution, which are worded as follows:
"Article II
DECLARATION OF PRINCIPLES AND STATE POLICIES
xxx xxx xxx
Sec. 19.The State shall develop a self-reliant and independent national economy effectively controlled
by Filipinos.
xxx xxx xxx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xxx xxx xxx
Sec. 10. . . 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.
xxx xxx xxx
Sec. 12.The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them competitive."
Petitioners aver that these sacred constitutional principles are desecrated by the following WTO provisions quoted in
their memorandum: 19
"a)In the area of investment measures related to trade in goods (TRIMS, for brevity):
"Article 2
National Treatment and Quantitative Restrictions.
1.Without prejudice to other rights and obligations under GATT 1994. No Member shall apply any
TRIM that is inconsistent with the provisions of Article III or Article XI of GATT 1994.

2.An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph I of Article XI of GATT 1994 is contained
in the Annex to this Agreement." (Agreement on Trade-Related Investment Measures, Vol. 27,
Uruguay Round, Legal Instruments, p. 22121, emphasis supplied).
The Annex referred to reads as follows:
"ANNEX
Illustrative List
1.TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of
Article III of GATT 1994 include those which are mandatory or enforceable under domestic law
or under administrative rulings, or compliance with which is necessary to obtain an advantage,
and which require:
(a)the purchase or use by an enterprise of products of domestic origin or from any
domestic source, whether specified in terms of particular products, in terms
of volume or value of products, or in terms of proportion of volume or value
of its local production; or
(b)that an enterprise's purchases or use of imported products be limited to an
amount related to the volume or value of local products that it exports. LLjur
2.TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions
provided for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or
enforceable under domestic laws or under administrative rulings, or compliance with which
is necessary to obtain an advantage, and which restrict:
(a)the importation by an enterprise of products used in or related to the local
production that it exports;
(b)the importation by an enterprise of products used in or related to its local
production by restricting its access to foreign exchange inflows attributable
to the enterprise; or
(c)the exportation or sale for export specified in terms of particular products, in
terms of volume or value of products, or in terms of a preparation of volume
or value of its local production." (Annex to the Agreement on Trade-Related
Investment Measures, Vol. 27, Uruguay Round Legal Documents, p. 22125,
emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:
The products of the territory of any contracting party imported into the territory of any other
contracting party shall be accorded treatment no less favorable than that accorded to like
products of national origin in respect of laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of
this paragraph shall not prevent the application of differential internal transportation
charges which are based exclusively on the economic operation of the means of transport
and not on the nationality of the product." (Article III, GATT 1947, as amended by the
Protocol Modifying Part II, and Article XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in
relation to paragraph 1 (a) of the General Agreement on Tariffs and Trade 1994, Vol. 1,
Uruguay Round, Legal Instruments p. 177, emphasis supplied).
"b)In the area of trade-related aspects of intellectual property rights (TRIPS, for brevity):
Each Member shall accord to the nationals of other Members treatment no less favourable than
that it accords to its own nationals with regard to the protection of intellectual property . . .
(par. 1, Article 3, Agreement on Trade-Related Aspect of Intellectual Property rights, Vol. 31,
Uruguay Round, Legal Instruments, p. 25432 (emphasis supplied)
"(c)In the area of the General Agreement on Trade in Services:
National Treatment
1.In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out
therein, each Member shall accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment no less favourable than it
accords to its own like services and service suppliers.
2.A Member may meet the requirement of paragraph I by according to services and service suppliers
of any other Member, either formally identical treatment or formally different treatment to
that it accords to its own like services and service suppliers.
3.Formally identical or formally different treatment shall be considered to be less favourable if it
modifies the conditions of completion in favour of services or service suppliers of the

Member compared to like services or service suppliers of any other Member. (Article XVII,
General Agreement on Trade in Services, Vol. 28, Uruguay Round Legal Instruments, p. 22610
emphasis supplied)."
It is petitioners' position that the foregoing "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 the Constitution. They allegedly render meaningless the phrase "effectively controlled by
Filipinos." The constitutional conflict becomes more manifest when viewed in the context of the clear duty imposed on
the Philippines as a WTO member to ensure the conformity of its laws, regulations and administrative procedures with
its obligations as provided in the annexed agreements. 20 Petitioners further argue that these provisions contravene
constitutional limitations on the role exports play in national development and negate the preferential treatment
accorded to Filipino labor, domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such Charter provisions are not self-
executing and merely set out general policies; (2) that these nationalistic portions of the Constitution invoked by
petitioners should not be read in isolation but should be related to other relevant provisions of Art. XII, particularly Secs.
1 and 13 thereof; (3) that read properly, the cited WTO clauses do not conflict with the Constitution; and (4) that the
WTO Agreement contains sufficient provisions to protect developing countries like the Philippines from the harshness of
sudden trade liberalization. LLphil
We shall now discuss and rule on these arguments.
Declaration of Principles Not Self-Executing
By its very title, Article II of the Constitution is a "declaration of principles and state policies." The counterpart of this
article in the 1935 Constitution 21 is called the "basic political creed of the nation" by Dean Vicente Sinco. 22 These
principles in Article II are not intended to be self-executing principles ready for enforcement through the
courts. 23 They are used by the judiciary as aids or as guides in the exercise of its power of judicial review, and by the
legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated vs. Morato, 24 the principles
and state policies enumerated in Article II and some sections of Article XII are not "self-executing provisions, the
disregard of which can give rise to a cause of action in the courts. They do not embody judicially enforceable
constitutional rights but guidelines for legislation."

In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles need legislative enactments to
implement them, thus:
"On petitioners' allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely statements
of principles and policies. As such, they are basically not self-executing, meaning a law should be
passed by Congress to clearly define and effectuate such principles.
'In general, therefore, the 1935 provisions were not intended to be self-executing principles
ready for enforcement through the courts. They were rather directives addressed to the
executive and to the legislature. If the executive and the legislature failed to heed the
directives of the article, the available remedy was not judicial but political. The electorate
could express their displeasure with the failure of the executive and the legislature through
the language of the ballot. (Bernas, Vol. II, p. 2)."
The reasons for denying a cause of action to an alleged infringement of broad constitutional principles are sourced from
basic considerations of due process and the lack of judicial authority to wade "into the uncharted ocean of social and
economic policy making." Mr. Justice Florentino P. Feliciano in his concurring opinion in Oposa vs. Factoran,
Jr., 26 explained these reasons as follows:
"My suggestion is simply that petitioners must, before the trial court, show a more specific legal right
a right cast in language of a significantly lower order of generality than Article II (15) of
the Constitution that is or may be violated by the actions, or failures to act, imputed to the public
respondent by petitioners so that the trial court can validly render judgment granting all or part of
the relief prayed for. To my mind, the court should be understood as simply saying that such a more
specific legal right or rights may well exist in our corpus of law, considering the general policy
principles found in theConstitution and the existence of the Philippine Environment Code, and that
the trial court should have given petitioners an effective opportunity so to demonstrate, instead of
aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a cause of action be a
specific, operable legal right, rather than a constitutional or statutory policy, for at least two (2)
reasons. One is that unless the legal right claimed to have been violated or disregarded is given

specification in operational terms, defendants may well be unable to defend themselves intelligently
and effectively; in other words, there are due process dimensions to this matter.
The second is a broader-gauge consideration where a specific violation of law or applicable
regulation is not alleged or proved, petitioners can be expected to fall back on the expanded
conception of judicial power in the second paragraph of Section 1 of Article VIII of
the Constitution which reads:
'Section 1.. . .
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government.' (Emphases supplied)
When substantive standards as general as 'the right to a balanced and healthy ecology' and 'the right
to health' are combined with remedial standards as broad ranging as 'a grave abuse of discretion
amounting to lack or excess of jurisdiction,' the result will be, it is respectfully submitted, to propel
courts into the uncharted ocean of social and economic policy making. At least in respect of the vast
area of environmental protection and management, our courts have no claim to special technical
competence and experience and professional qualification. Where no specific, operable norms and
standards are shown to exist, then the policy making departments the legislative and executive
departments must be given a real and effective opportunity to fashion and promulgate those
norms and standards, and to implement them before the courts should intervene." cdasia
Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles relating to the
national economy and patrimony, should be read and understood in relation to the other sections in said article,
especially Secs. 1 and 13 thereof which read:
"Section 1.The goals of the national economy are a more equitable distribution of opportunities,
income, and wealth; a sustained increase in the amount of goods and services produced by the nation
for the benefit of the people; and an expanding productivity as the key to raising the quality of life for
all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of human and
natural resources, and which are competitive in both domestic and foreign markets. However, the
State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given
optimum opportunity to develop. . .
xxx xxx xxx
Sec. 13.The State shall pursue a trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity."
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic development, as follows:
1.A more equitable distribution of opportunities, income and wealth;
2.A sustained increase in the amount of goods and services provided by the nation for the benefit of
the people; and
3.An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by expressing
preference in favor of qualified Filipinos "in the grant of rights, privileges and concessions covering the national
economy and patrimony" 27 and in the use of "Filipino labor, domestic materials and locally-produced goods"; (2) by
mandating the State to "adopt measures that help make them competitive; 28 and (3) by requiring the State to "develop
a self-reliant and independent national economy effectively controlled by Filipinos." 29 In similar language,
the Constitution takes into account the realities of the outside world as it requires 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"; 30 and speaks of industries "which are competitive in both domestic and foreign markets" as well as of the
protection of "Filipino enterprises against unfair foreign competition and trade practices."
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et al., 31 this Court held
that "Sec. 10, second par., 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." However, as the
constitutional provision itself states, it is enforceable only in regard to "the grants of rights, privileges and concessions
covering national economy and patrimony" and not to every aspect of trade and commerce. It refers to exceptions rather

than the rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather, the issue
is whether, as a rule, there are enough balancing provisions in the Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO Agreement. And we hold that there are.
All told, while 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. 32 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.
WTO Recognizes Need to Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to protect weak and
developing economies, which comprise the vast majority of its members. Unlike in the UN where major states have
permanent seats and veto powers in the Security Council, in the WTO, decisions are made on the basis of sovereign
equality, with each member's vote equal in weight to that of any other. There is no WTO equivalent of the UN Security
Council. aisadc
"WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference
and the General Council shall be taken by the majority of the votes cast, except in cases of
interpretation of the Agreement or waiver of the obligation of a member which would require three
fourths vote. Amendments would require two thirds vote in general. Amendments to MFN provisions
and the Amendments provision will require assent of all members. Any member may withdraw from
the Agreement upon the expiration of six months from the date of notice of withdrawals." 33

Hence, poor countries can protect their common interests more effectively through the WTO than through one-on-one
negotiations with developed countries. Within the WTO, developing countries can form powerful blocs to push their
economic agenda more decisively than outside the Organization. This is not merely a matter of practical alliances but a
negotiating strategy rooted in law. Thus, the basic principles underlying the WTO Agreement recognize the need of
developing countries like the Philippines to "share in the growth in international trade commensurate with the needs of
their economic development." These basic principles are found in the preamble 34 of the WTO Agreement as follows:
"The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic endeavour should be conducted
with a view to raising standards of living, ensuring full employment and a large and steadily growing
volume of real income and effective demand, and expanding the production of and trade in goods and
services, while allowing for the optimal use of the world's resources in accordance with the objective
of sustainable development, seeking both to protect and preserve the environment and to enhance
the means for doing so in a manner consistent with their respective needs and concerns at different
levels of economic development,
Recognizing further that there is need for positive efforts designed to ensure that developing
countries, and especially the least developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic development,
Being desirous of contributing to these objectives by entering into reciprocal and mutually
advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade
and to the elimination of discriminatory treatment in international trade relations,
Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system
encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalization
efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the objectives underlying this multilateral
trading system, . . ." (emphasis supplied.)
Specific WTO Provisos Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic principles, the WTO
Agreement grants developing countries a more lenient treatment, giving their domestic industries some protection from
the rush of foreign competition. Thus, with respect to tariffs in general, preferential treatment is given to developing
countries in terms of the amount of tariff reduction and the period within which the reduction is to be spread out.
Specifically, GATT requires an average tariff reduction rate of 36% for developed countries to be effected within a period
of six (6) years while developing countries including the Philippines are required to effect an average tariff
reduction of only 24% within ten (10) years.

In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to agricultural products
by 20% over six (6) years, as compared to only 13% for developing countries to be effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed countries to reduce their budgetary
outlays for export subsidy by 36% and export volumes receiving export subsidy by 21% within a period of six (6) years.
For developing countries, however, the reduction rate is only two-thirds of that prescribed for developed countries and a
longer period of ten (10) years within which to effect such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade practices including
anti-dumping measures, countervailing measures and safeguards against import surges. Where local businesses are
jeopardized by unfair foreign competition, the Philippines can avail of these measures. There is hardly therefore any
basis for the statement that under the WTO, local industries and enterprises will all be wiped out and that Filipinos will
be deprived of control of the economy. Quite the contrary, the weaker situations of developing nations like the
Philippines have been taken into account; thus, there would be no basis to say that in joining the WTO, the respondents
have gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the yet
uncharted sea of economic liberalization. But such decision cannot be set aside on the ground of grave abuse of
discretion, simply because we disagree with it or simply because we believe only in other economic policies. As earlier
stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade
liberalization as an economic policy. It will only perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion. cdtai
Constitution Does Not Rule Out Foreign Competition
Furthermore, the constitutional policy of a "self-reliant and independent national economy" 35 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." 36
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," 37 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.
Constitution Favors Consumers, Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor does it contain any
specific pronouncement that Filipino companies should be pampered with a total proscription of foreign competition. On
the other hand, respondents claim that WTO/GATT aims to make available to the Filipino consumer the best goods and
services obtainable anywhere in the world at the most reasonable prices. Consequently, the question boils down to
whether WTO/GATT will favor the general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will as promised by its promoters
expand the country's exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality products at the most reasonable rates to the
Filipino public?
The responses to these questions involve "judgment calls" by our policy makers, for which they are answerable to our
people during appropriate electoral exercises. Such questions and the answers thereto are not subject to judicial
pronouncements based on grave abuse of discretion.
Constitution Designed to Meet Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and ratified in 1987. That
does not mean however that the Charter is necessarily flawed in the sense that its framers might not have anticipated
the advent of a borderless world of business. By the same token, the United Nations was not yet in existence when the
1935 Constitution became effective. Did that necessarily mean that the then Constitution might not have contemplated a
diminution of the absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the decisions of various UN organs like the Security Council?

It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of contemporary
events. They should be interpreted to cover even future and unknown circumstances. It is to the credit of its drafters that
a Constitution can withstand the assaults of bigots and infidels but at the same time bend with the refreshing winds of
change necessitated by unfolding events. As one eminent political law writer and respected jurist 38 explains:
"The Constitution must be quintessential rather than superficial, the root and not the blossom, the
base and framework only of the edifice that is yet to rise. It is but the core of the dream that must take
shape, not in a twinkling by mandate of our delegates, but slowly 'in the crucible of Filipino minds and
hearts,' where it will in time develop its sinews and gradually gather its strength and finally achieve
its substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown from the brow
of the Constitutional Convention, nor can it conjure by mere fiat an instant Utopia. It must grow with
the society it seeks to re-structure and march apace with the progress of the race, drawing from the
vicissitudes of history the dynamism and vitality that will keep it, far from becoming a petrified rule, a
pulsing, living law attuned to the heartbeat of the nation." cdtech

Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its laws, regulations and
administrative procedures with its obligations as provided in the annexed Agreements." 39 Petitioners maintain that
this undertaking "unduly limits, restricts and impairs Philippine sovereignty, specifically the legislative power which
under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress of the Philippines. It is an assault on
the sovereign powers of the Philippines because this means that Congress could not pass legislation that will be good for
our national interest and general welfare if such legislation will not conform with the WTO Agreement, which not only
relates to the trade in goods . . . but also to the flow of investments and money . . . as well as to a whole slew of
agreements on socio-cultural matters . . ." 40
More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is lodged in the
Congress. 41 And while the Constitutionallows Congress to authorize the President to fix tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts, such authority is subject to "specified limits and . . .
such limitations and restrictions" as Congress may provide, 42 as in fact it did under Sec. 401 of the Tariff and Customs
Code.
Sovereignty Limited by International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners stressed their arguments on this issue.
However, while sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it is
however subject to restrictions and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a
member of the family of nations. Unquestionably, the Constitution did not envision a hermit-type isolation of the country
from the rest of the world. In its Declaration of Principles and State Policies, the Constitution "adopts the generally
accepted principles of international law as part of the law of the land, and adheres to the policy of peace, equality, justice,
freedom, cooperation and amity, with all nations." 43 By the doctrine of incorporation, the country is bound by generally
accepted principles of international law, which are considered to be automatically part of our own laws. 44 One of the
oldest and most fundamental rules in international law is pacta sunt servanda international agreements must be
performed in good faith. "A treaty engagement is not a mere moral obligation but creates a legally binding obligation on
the parties . . . A state which has contracted valid international obligations is bound to make in its legislations such
modifications as may be necessary to ensure the fulfillment of the obligations undertaken." 45
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations
may surrender some aspects of their state power in exchange for greater benefits granted by or derived from a
convention or pact. After all, states, like individuals, live with coequals, and in pursuit of mutually covenanted objectives
and benefits, they also commonly agree to limit the exercise of their otherwise absolute rights. Thus, treaties have been
used to record agreements between States concerning such widely diverse matters as, for example, the lease of naval
bases, the sale or cession of territory, the termination of war, the regulation of conduct of hostilities, the formation of
alliances, the regulation of commercial relations, the settling of claims, the laying down of rules governing conduct in
peace and the establishment of international organizations. 46 The sovereignty of a state therefore cannot in fact and in
reality be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of
membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy,
"Today, no nation can build its destiny alone. The age of self-sufficient nationalism is over. The age of interdependence is
here." 47
UN Charter and Other Treaties Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented to restrict its
sovereign rights under the "concept of sovereignty as auto-limitation." 47-A Under Article 2 of the UN Charter, "(a)ll
members shall give the United Nations every assistance in any action it takes in accordance with the present Charter,
and shall refrain from giving assistance to any state against which the United Nations is taking preventive or

enforcement action." Such assistance includes payment of its corresponding share not merely in administrative expenses
but also in expenditures for the peace-keeping operations of the organization. In its advisory opinion of July 20, 1961,
the International Court of Justice held that money used by the United Nations Emergency Force in the Middle East and in
the Congo were "expenses of the United Nations" under Article 17, paragraph 2, of the UN Charter. Hence, all its
members must bear their corresponding share in such expenses. In this sense, the Philippine Congress is restricted in its
power to appropriate. It is compelled to appropriate funds whether it agrees with such peace-keeping expenses or not.
So too, under Article 105 of the said Charter, the UN and its representatives enjoy diplomatic privileges and immunities,
thereby limiting again the exercise of sovereignty of members within their own territory. Another example: although
"sovereign equality" and "domestic jurisdiction" of all members are set forth as underlying principles in the UN Charter,
such provisos are however subject to enforcement measures decided by the Security Council for the maintenance of
international peace and security under Chapter VII of the Charter. A final example: under Article 103, "(i)n the event of a
conflict between the obligations of the Members of the United Nations under the present Charter and their obligations
under any other international agreement, their obligation under the present charter shall prevail," thus unquestionably
denying the Philippines as a member the sovereign power to make a choice as to which of conflicting obligations, if
any, to honor. cda
Apart from the UN Treaty, the Philippines has entered into many other international pacts both bilateral and
multilateral that involve limitations on Philippine sovereignty. These are enumerated by the Solicitor General in his
Compliance dated October 24, 1996, as follows:
"(a)Bilateral convention with the United States regarding taxes on income, where the Philippines
agreed, among others, to exempt from tax, income received in the Philippines by, among
others, the Federal Reserve Bank of the United States, the Export/Import Bank of the United
States, the Overseas Private Investment Corporation of the United States. Likewise, in said
convention, wages, salaries and similar remunerations paid by the United States to its
citizens for labor and personal services performed by them as employees or officials of the
United States are exempt from income tax by the Philippines.
(b)Bilateral agreement with Belgium, providing, among others, for the avoidance of double taxation
with respect to taxes on income.
(c)Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.
(d)Bilateral convention with the French Republic for the avoidance of double taxation.
(e)Bilateral air transport agreement with Korea where the Philippines agreed to exempt from all
customs duties, inspection fees and other duties or taxes aircrafts of South Korea and the
regular equipment, spare parts and supplies arriving with said aircrafts.
(f)Bilateral air service agreement with Japan, where the Philippines agreed to exempt from customs
duties, excise taxes, inspection fees and other similar duties, taxes or charges fuel, lubricating
oils, spare parts, regular equipment, stores on board Japanese aircrafts while on Philippine
soil.
(g)Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers
the same privileges as those granted to Japanese and Korean air carriers under separate air
service agreements.
(h)Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines
exempted Israeli nationals from the requirement of obtaining transit or visitor visas for a
sojourn in the Philippines not exceeding 59 days.
(i)Bilateral agreement with France exempting French nationals from the requirement of obtaining
transit and visitor visa for a sojourn not exceeding 59 days.
(j)Multilateral Convention on Special Missions, where the Philippines agreed that premises of Special
Missions in the Philippines are inviolable and its agents can not enter said premises without
consent of the Head of Mission concerned. Special Missions are also exempted from customs
duties, taxes and related charges.
(k)Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be
governed by the Vienna Convention on the Law of Treaties.
(l)Declaration of the President of the Philippines accepting compulsory jurisdiction of the
International Court of Justice. The International Court of Justice has jurisdiction in all legal
disputes concerning the interpretation of a treaty, any question of international law, the
existence of any fact which, if established, would constitute a breach of international
obligation."
In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign powers of taxation,
eminent domain and police power. The underlying consideration in this partial surrender of sovereignty is the reciprocal

commitment of the other contracting states in granting the same privilege and immunities to the Philippines, its officials
and its citizens. The same reciprocity characterizes the Philippine commitments under WTO-GATT.

"International treaties, whether relating to nuclear disarmament, human rights, the environment, the
law of the sea, or trade, constrain domestic political sovereignty through the assumption of external
obligations. But unless anarchy in international relations is preferred as an alternative, in most cases
we accept that the benefits of the reciprocal obligations involved outweigh the costs associated with
any loss of political sovereignty. (T)rade treaties that structure relations by reference to durable,
well-defined substantive norms and objective dispute resolution procedures reduce the risks of
larger countries exploiting raw economic power to bully smaller countries, by subjecting power
relations to some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that liberalization will
provide access to a larger set of potential new trading relationship than in case of the larger country
gaining enhanced success to the smaller country's market." 48
The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without violating
the Constitution, based on the rationale that the Philippines "adopts the generally accepted principles of international
law as part of the law of the land and adheres to the policy of . . . cooperation and amity with all nations." casia
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS) 49 intrudes on the power of the Supreme Court to promulgate
rules concerning pleading, practice and procedures. 50
To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate its full text as follows:
"Article 34
Process Patents: Burden of Proof
1.For the purposes of civil proceedings in respect of the infringement of the rights of the owner
referred to in paragraph 1 (b) of Article 28, if the subject matter of a patent is a process for obtaining
a product, the judicial authorities shall have the authority to order the defendant to prove that the
process to obtain an identical product is different from the patented process. Therefore, Members
shall provide, in at least one of the following circumstances, that any identical product when
produced without the consent of the patent owner shall, in the absence of proof to the contrary, be
deemed to have been obtained by the patented process:
(a)if the product obtained by the patented process is new;
(b)if there is a substantial likelihood that the identical product was made by the process and the
owner of the patent has been unable through reasonable efforts to determine the process
actually used.
2.Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on
the alleged infringer only if the condition referred to in subparagraph (a) is fulfilled or only if the
condition referred to in subparagraph (b) is fulfilled.
3.In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their
manufacturing and business secrets shall be taken into account."
From the above, a WTO Member is required to provide a rule of disputable (note the words "in the absence of proof to
the contrary") presumption that a product shown to be identical to one produced with the use of a patented process
shall be deemed to have been obtained by the (illegal) use of the said patented process, (1) where such product obtained
by the patented product is new, or (2) where there is "substantial likelihood" that the identical product was made with
the use of the said patented process but the owner of the patent could not determine the exact process used in obtaining
such identical product. Hence, the "burden of proof" contemplated by Article 34 should actually be understood as the
duty of the alleged patent infringer to overthrow such presumption. Such burden, properly understood, actually refers to
the "burden of evidence" (burden of going forward) placed on the producer of the identical (or fake) product to show
that his product was produced without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless of the presumption
provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the existence of the alleged
identical product, the fact that it is "identical" to the genuine one produced by the patented process and the fact of
"newness" of the genuine product or the fact of "substantial likelihood" that the identical product was made by the
patented process.
The foregoing should really present no problem in changing the rules of evidence as the present law on the
subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a similar presumption in cases
of infringement of patented design or utility model, thus:

"SEC. 60.Infringement. Infringement of a design patent or of a patent for utility model shall consist
in unauthorized copying of the patented design or utility model for the purpose of trade or industry
in the article or product and in the making, using or selling of the article or product copying the
patented design or utility model. Identity or substantial identity with the patented design or utility
model shall constitute evidence of copying." (emphasis supplied)
Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies only if (1)
the product obtained by the patented process is NEW or (2) there is a substantial likelihood that the identical product
was made by the process and the process owner has not been able through reasonable effort to determine the process
used. Where either of these two provisos does not obtain, members shall be free to determine the appropriate method of
implementing the provisions of TRIPS within their own internal systems and processes.
By and large, the arguments adduced in connection with our disposition of the third issue derogation of legislative
power will apply to this fourth issue also. Suffice it to say that the reciprocity clause more than justifies such
intrusion, if any actually exists. Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due
process and the concept of adversarial dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents, trademarks and copyrights, the
adjustment in legislation and rules of procedure will not be substantial. 52
Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes but not in the other documents
referred to in the Final Act, namely the Ministerial Declaration and Decisions and the Understanding on Commitments in
Financial Services is defective and insufficient and thus constitutes abuse of discretion. They submit that such
concurrence in the WTO Agreement alone is flawed because it is in effect a rejection of the Final Act, which in turn was
the document signed by Secretary Navarro, in representation of the Republic upon authority of the President. They
contend that the second letter of the President to the Senate 53 which enumerated what constitutes the Final Act should
have been the subject of concurrence of the Senate. cdt
"A final act, sometimes called protocol de clture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of
treaties, conventions, recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference." 54 It is not the treaty itself. It is rather a summary of the
proceedings of a protracted conference which may have taken place over several years. The text of
the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" is
contained in just one page55 in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations. By signing said Final Act, Secretary Navarro as representative of the Republic of the
Philippines undertook:
"(a)to submit, as appropriate, the WTO Agreement for the consideration of their respective
competent authorities with a view to seeking approval of the Agreement in accordance with
their procedures; and
(b)to adopt the Ministerial Declarations and Decisions."
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from its signatories,
namely, concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They were approved by
the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of the members can meet "to give
effect to those provisions of this Agreement which invoke joint action, and generally with a view to facilitating the
operation and furthering the objectives of this Agreement." 56
The Understanding on Commitments in Financial Services also approved in Marrakesh does not apply to the Philippines.
It applies only to those 27 Members which "have indicated in their respective schedules of commitments on standstill,
elimination of monopoly, expansion of operation of existing financial service suppliers, temporary entry of personnel,
free transfer and processing of information, and national treatment with respect to access to payment, clearing systems
and refinancing available in the normal course of business." 57
On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed included as its
integral parts, 58 as follows:

"Article II
Scope of the WTO
1.The WTO shall provide the common institutional framework for the conduct of trade relations
among its Members in matters to the agreements and associated legal instruments included in the
Annexes to this Agreement.

2.The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter
referred to as "Multilateral Agreements") are integral parts of this Agreement, binding on all
Members.
3.The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as
"Plurilateral Trade Agreements") are also part of this Agreement for those Members that have
accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create
either obligation or rights for Members that have not accepted them.
4.The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter referred to
as "GATT 1994") is legally distinct from the General Agreement on Tariffs and Trade, dated 30
October 1947, annexed to the Final Act adopted at the conclusion of the Second Session of the
Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently
rectified, amended or modified (hereinafter referred to as "GATT 1947").
It should be added that the Senate was well-aware of what it was concurring in as shown by the members' deliberation
on August 25, 1994. After reading the letter of President Ramos dated August 11, 1994, 59 the senators of the Republic
minutely dissected what the Senate was concurring in, as follows: 60
"THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day
hearing of this Committee yesterday. Was the observation made by Senator Taada that what was
submitted to the Senate was not the agreement on establishing the World Trade Organization by the
final act of the Uruguay Round which is not the same as the agreement establishing the World Trade
Organization? And on that basis, Senator Tolentino raised a point of order which, however, he agreed
to withdraw upon understanding that his suggestion for an alternative solution at that time was
acceptable. That suggestion was to treat the proceedings of the Committee as being in the nature of
briefings for Senators until the question of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting a new. . . is he making a new
submission which improves on the clarity of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no
misunderstanding, it was his intention to clarify all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and later on Senator Tolentino since they were the
ones that raised this question yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to
the Senate for ratification is not the Final Act of the Uruguay Round, but rather the Agreement on the
World Trade Organization as well as the Ministerial Declarations and Decisions, and the Understanding
and Commitments in Financial Services.
I am now satisfied with the wording of the new submission of President Ramos.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And after him
Senator Neptali Gonzales and Senator Lina.
SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I saw
the draft of his earlier, and I think it now complies with the provisions of the Constitution, and with the
Final Act itself . The Constitution does not require us to ratify the Final Act. It requires us to ratify the
Agreement which is now being submitted. The Final Act itself specifies what is going to be submitted to
with the governments of the participants. prcd
In paragraph 2 of the Final Act, we read and I quote:
'By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO
Agreement for the consideration of the respective competent authorities with a view of seeking approval
of the Agreement in accordance with their procedures.'
In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification
or acceptance as whatever their constitutional procedures may provide but it is the World Trade
Organization Agreement. And if that is the one that is being submitted now, I think it satisfies both
theConstitution and the Final Act itself .
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had
been adequately reflected in the journal of yesterday's session and I don't see any need for repeating the
same.

Now, I would consider the new submission as an act ex abudante cautela.


THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on
this?
SEN. LINA, Mr. President, I agree with the observation just made by Senator Gonzales out of the
abundance of question. Then the new submission is, I believe, stating the obvious and therefore I have no
further comment to make."
Epilogue
In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are invoking this Court's
constitutionally imposed duty "to determine whether or not there has been grave abuse of discretion amounting to lack
or excess of jurisdiction" on the part of the Senate in giving its concurrence therein via Senate Resolution No. 97.
Procedurally, a writ of certiorari grounded on grave abuse of discretion may be issued by the Court under Rule 65 of the
Rules of Court when it is amply shown that petitioners have no other plain, speedy and adequate remedy in the ordinary
course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. 61 Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so
gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law. 62 Failure on the part of the petitioner to show grave abuse of discretion will result in the
dismissal of the petition. 63
In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one of two sovereign
houses of Congress and is thus entitled to great respect in its actions. It is itself a constitutional body independent and
coordinate, and thus its actions are presumed regular and done in good faith. Unless convincing proof and persuasive
arguments are presented to overthrow such presumptions, this Court will resolve every doubt in its favor. Using the
foregoing well-accepted definition of grave abuse of discretion and the presumption of regularity in the Senate's
processes, this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's exercise of its
power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the Constitution. 64
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. cdasia
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. Ineludably, 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.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian Renaissance 65 where "the
East will become the dominant region of the world economically, politically and culturally in the next century." He refers
to the "free market" espoused by WTO as the "catalyst" in this coming Asian ascendancy. There are at present about 31
countries including China, Russia and Saudi Arabia negotiating for membership in the WTO. Notwithstanding objections
against possible limitations on national sovereignty, the WTO remains as the only viable structure for multilateral
trading and the veritable forum for the development of international trade law. The alternative to WTO is isolation,
stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of the advantages
and disadvantages of globalization with its on-line experience, and endowed with a vision of the future, the Philippines
now straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium.
Let the people, through their duly authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit. cda


SO ORDERED.
Narvasa, C .J ., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco, Hermosisima,
Jr., and Torres, Jr., JJ., concur.
Padilla and Vitug, JJ., concur in the result.

EN BANC
[G.R. No. 122156. February 3, 1997.]

MANILA PRINCE HOTEL, petitioner, vs.
GOVERNMENT
SERVICE
INSURANCE
SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, respondents.

SYLLABUS

1. POLITICAL LAW; CONSTITUTION; DEFINED. 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. It has been defined as the fundamental and paramount law of the nation. It prescribes the permanent
framework of a system of government, assigns to the different departments their respective powers and duties, and
establishes certain fixed principles on which government is founded. The fundamental conception in other words is that
it is a supreme law to which all other laws must conform and in accordance with which all private rights must be
determined and all public authority administered.
2. ID.; ID.; DEEMED WRITTEN IN EVERY STATUTE AND CONTRACT. Under the doctrine of constitutional supremacy,
if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or
by the executive branch or entered into by private persons for private purposes is null and void and without any force
and effect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written
in every statute and contract. Adhering to the doctrine of constitutional supremacy, the subject constitutional provision
is, as it should be, impliedly written in the bidding rules issued by respondent GSIS, lest the bidding rules be nullified for
being violative of the Constitution. It is a basic principle in constitutional law that all laws and contracts must conform
with the fundamental law of the land. Those which violate the Constitution lose their reason for being.
3. ID.; ID.; CONSIDERED SELF-EXECUTING RATHER THAN NON-SELF-EXECUTING. In case of doubt,
the Constitution should be considered self-executing rather than non-self-executing . . . Unless the contrary is clearly
intended, the provisions of the Constitution should be considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be effective. These provisions would be subordinated to
the will of the lawmaking body, which could make them entirely meaningless by simply refusing to pass the needed
implementing statute. (Cruz, Isagani A.,Constitutional Law, 1993 ed., pp. 8-10)
4. ID.; ID.; SELF-EXECUTING PROVISIONS; LEGISLATURE NOT PRECLUDED FROM ENACTING LAWS ENFORCING
PROVISIONS. Quite apparently, Sec. 10, second par., 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 theConstitution.
Minor details may be left to the legislature without the self-executing nature of constitutional provisions. The omission
from a constitution of any express provision for a remedy for enforcing a right or liability is not necessarily an indication
that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does not
necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution,
further the exercise of constitutional right and make it more available. Subsequent legislation however does not
necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.
5. ID.; ID.; ID.; A PROVISION MAY BE SELF-EXECUTING IN ONE PART AND NON-SELF-EXECUTING IN ANOTHER.
Respondents also argue that the non-self-executing nature of Sec. 10, second par., 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.
6. ID.; ID.; NATIONAL PATRIMONY; PROVISION ON PREFERENCE TO QUALIFIED FILIPINOS, SELF-EXECUTING. Sec.
10, second par., Art. XII of the 1987Constitution 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 ourConstitution 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.
7. ID.; ID.; ID.; INCLUDES THE NATIONAL RESOURCES AND CULTURAL 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.
8. ID.; ID.; ID.; MANILA HOTEL CORPORATION, EMBRACED THEREIN; FILIPINO FIRST POLICY PROVISION, APPLICABLE
IN SALES OF HOTEL STOCKS. 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.
9. ID.; STATE; SALE BY THE GSIS OF 51% OF ITS SHARE IN MANILA HOTEL CORP., A STATE ACTION, SUBJECT TO
CONSTITUTIONAL COMMAND. 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.
10. ID.; CONSTITUTION; WHEN THE CONSTITUTION ADDRESSES THE STATE, IT REFERS TO BOTH PEOPLE AND
GOVERNMENT. When the Constitutionaddresses 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.
11. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS; SALE OF STOCKS
OF MANILA HOTEL CORPORATION BY THE GSIS; FILIPINOS ALLOWED TO MATCH THE BID OF FOREIGN ENTITY. 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 imply disregarded. To ignore it would be to sanction a perilous
skirting of the basic law.
12. REMEDIAL LAW; ACTIONS; FOREIGN BIDDERS WITHOUT CAUSE OF ACTION AGAINST GSIS BEFORE ACCEPTANCE
OF BID. The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad
since petitioner was well aware from the beginning that a foreigner could participate in the bidding is meritless.
Undoubtedly, Filipinos and foreigners alike were invited to the bidding. But foreigners may be awarded the sale only if
no Filipino qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign entity. In the case
before us, while petitioner was already preferred at the inception of the bidding because of the constitutional mandate,
petitioner had not yet matched the bid offered by Renong Berhad. Thus it did not have the right or personality then to
compel respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the foreign firm and the
apparent disregard by respondent GSIS of petitioner's matching bid did the latter have a cause of action.

13. ID.; SPECIAL CIVIL ACTION, CERTIORARI; FAILURE OF THE GSIS TO EXECUTE CORRESPONDING DOCUMENTS
WHERE PETITIONER HAD MATCHED THE BID PRICE BY FOREIGN BIDDER, A GRAVE ABUSE OF DISCRETION. Since
petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules,
respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and to execute the

necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents
with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly
constitutes grave abuse of discretion.
14. ID.; SUPREME COURT; DUTY BOUND TO MAKE SURE THAT CONTRACTS DO NOT VIOLATE THE CONSTITUTION OR
THE LAWS. While it is no business of the Court to intervene in contracts of the kind referred to or set itself up as the
judge of whether they are viable or attainable, it is its bounden duty to make sure that they do not violate
the Constitution or the laws, or are not adopted or implemented with grave abuse of discretion amounting to lack or
excess of jurisdiction. It will never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism.
Indeed, the Court will always defer to the Constitution in the proper governance of a free society; after all, there is
nothing so sacrosanct in any economic policy as to draw itself beyond judicial review when the Constitution is involved.
PADILLA, J., concurring opinion:
1. POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION, CONSTRUED. A study of the 1935 Constitution,
where the concept of "national patrimony" originated, would show that its framers decided to adopt the even more
comprehensive expression "Patrimony of the Nation" in the belief that the phrase encircles a concept embracing not only
the natural resources of the country but practically everything that belongs to the Filipino people, the tangible and the
material as well as the intangible and the spiritual assets and possessions of the people. It is to be noted that the framers
did not stop with conservation. They knew that conservation alone does not spell progress; and that this may be
achieved only through development as a correlative factor to assure to the people not only the exclusive ownership, but
also the exclusive benefits of their national patrimony. Moreover, the concept of national patrimony has been viewed as
referring not only to our rich natural resources but also to the cultural heritage of our race. There is no doubt in my mind
that the Manila Hotel is very much a part of our national patrimony and, as such deserves constitutional protection as to
who shall own it and benefit from its operation. This institution has played an important role in our nation's history,
having been the venue of many a historical event, and serving as it did, and as it does, as the Philippine Guest House for
visiting foreign heads of state, dignitaries, celebrities, and others.
2. ID.; ID.; MANILA HOTEL, PART OF OUR NATIONAL PATRIMONY. There is no doubt in my mind that
the Manila Hotel is very much a part of our national patrimony and, as such, deserves constitutional protection as to who
shall own it and benefit from its operation. This institution has played an important role in our nation's history, having
been the venue of many a historical event, and serving as it did, and as it does, as the Philippine Guest House for visiting
foreign heads of state, dignitaries, celebrities, and others.
3. ID.; ID.; PREFERENCE TO QUALIFIED FILIPINOS; APPLIED TO SALES OF SHARE OF STOCKS OF MANILA HOTEL.
"Preference to qualified Filipinos," to be meaningful, must refer not only to things that are peripheral, collateral, or
tangential. It must touch and affect the very "heart of the existing order." In the field of public bidding in the acquisition
of things that pertain to the national patrimony, preference to qualified Filipinos must allow a qualified Filipino to match
or equal the higher bid of a non-Filipino; the preference shall not operate only when the bids of the qualified Filipino and
the non-Filipino are equal in which case, the award should undisputedly be made to the qualified Filipino. The
Constitutional preference should give the qualified Filipino an opportunity to match or equal the higher bid of the non-
Filipino bidder if the preference of the qualified Filipino bidder is to be significant at all. While government agencies,
including the courts should re-condition their thinking to such a trend, and make it easy and even attractive for foreign
investors to come to our shores, yet we should not preclude ourselves from reserving to us Filipinos certain areas where
our national identity, culture and heritage are involved. In the hotel industry, for instance, foreign investors have
established themselves creditably, such as in the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should
not stop us from retaining 51% of the capital stock of the Manila Hotel Corporation in the hands of Filipinos. This would
be in keeping with the intent of the Filipino people to preserve our national patrimony, including our historical and
cultural heritage in the hands of Filipinos.
VITUG, J., separate opinion:
1. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PROVISION GIVING PREFERENCE TO QUALIFIED
FILIPINOS, SELF-EXECUTORY. The provision in our fundamental law which provides that "(i)n the grant of rights,
privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified
Filipinos" is self-executory. The provision verily does not need, although it can obviously be amplified or regulated by, an
enabling law or a set of rules.
2. ID.; ID.; ID.; PATRIMONY INCLUDES CULTURAL HERITAGE OF THE COUNTRY; MANILA HOTEL, EMBRACED THEREIN.
The term "patrimony" does not merely refer to the country's natural resources but also to its cultural heritage. A
"historical landmark," to use the words of Mr. Justice Justo P. Torres, Jr.,Manila Hotel has now indeed become part of
Philippine heritage.
3. ADMINISTRATIVE LAW; GOVERNMENT SERVICE INSURANCE SYSTEM; SALE OF ITS SHARE
IN MANILA HOTEL CORPORATION, AN ACT OF THE STATE; CONSTITUTIONAL REQUIREMENT SHOULD BE COMPLIED
WITH. The act of the Government Service Insurance System ("GSIS"), a government entity which derives its authority

from the State, in selling 51% of its share in MHC should be considered an act of the State subject to the Constitutional
mandate.
4. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS; DOES NOT
REFER TO ALLOWING QUALIFIED FILIPINOS TO MATCH FOREIGN BID. On the pivotal issue of the degree of
"preference to qualified Filipinos" I find it somewhat difficult to take the same path traversed by the forceful reasoning
of Justice Puno. In the particular case before us, the only meaningful preference, it seems, would really be to allow the
qualified Filipino to match the foreign bid for, as a practical matter, I cannot see any bid that literally calls for millions of
dollars to be at par (to the last cent) with another. The magnitude of the bids is such that it becomes hardly possible for
the competing bids to stand exactly "equal" which alone, under the dissenting view, could trigger the right of preference.

MENDOZA, J., separate opinion:
POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS; FILIPINO BIDDERS
SHOULD BE ALLOWED TO EQUAL BID OF FOREIGN FIRM IN SALE OF STOCKS OF MANILA HOTEL CORPORATION. I
take the view that in the context of the present controversy the only way to enforce the constitutional mandate that "[i]n
the grant of rights, privileges and concessions covering the national patrimony the State shall give preference to
qualified Filipinos" is to allow petitioner Philippine corporation to equal the bid of the Malaysian firm Renong Berhad for
the purchase of the controlling shares of stocks in the Manila Hotel Corporation. Indeed, it is the only way a qualified
Filipino or Philippine corporation can be given preference in the enjoyment of a right, privilege or concession given by
the State, by favoring it over a foreign national or corporation. Under the rules on public bidding of the Government
Service and Insurance System, if petitioner and the Malaysian firm had offered the same price per share, "priority [would
be given] to the bidder seeking the larger ownership interest in MHC," so that if petitioner bid for more shares, it would
be preferred to the Malaysian corporation for that reason and not because it is a Philippine corporation. Consequently, it
is only in cases like the present one, where an alien corporation is the highest bidder, that preferential treatment of the
Philippine corporation is mandated not by declaring it winner but by allowing it "to match the highest bid in terms of
price per share" before it is awarded the shares of stocks. That, to me, is what "preference to qualified Filipinos" means
in the context of this case by favoring Filipinos whenever they are at a disadvantage vis-a-vis foreigners.

TORRES, JR., J., separate opinion:
POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION; MANILA HOTEL, EMBRACED WITHIN THE MEANING
THEREOF; SALE OF ITS STOCKS SHOULD BE LIMITED TO QUALIFIED FILIPINOS. Section 10, Article XII of the
1987 Constitution should be read in conjunction with Article II of the same Constitutionpertaining to "Declaration of
Principles and State Policies" which ordain "The State shall develop a self-reliant and independent national economy,
effectively controlled by Filipinos." (Sec. 19), Interestingly, the matter of giving preference to "qualified Filipinos" was
one of the highlights in the 1987Constitution Commission proceedings. The nationalistic provisions of the
1987 Constitution reflect the history and spirit of the Malolos Constitution of 1898, the 1935 Constitution and the
1973 Constitution. I subscribe to the view that history, culture, heritage, and tradition are not legislated and is the
product of events, customs, usages and practices. It is actually a product of growth and acceptance by the
collective mores of a race. It is the spirit and soul of a people. The Manila Hotel is part of our history, culture and heritage.
Every inch of the Manila Hotel is witness to historic events (too numerous to mention) which shaped our history for
almost 84 years. The history of the Manila Hotel should not be placed in the auction block of a purely business
transaction, where profit subverts the cherished historical values of our people. The Filipino should be first under
his Constitution and in his own land.

PUNO, J., dissenting opinion:
1. POLITICAL LAW; CONSTITUTION; AS A RULE PROVISIONS THEREOF ARE SELF-EXECUTING.
A Constitution provides the guiding policies and principles upon which is built the substantial foundation and general
framework of the law and government. As a rule, its provisions are deemed self-executing and can be enforced without
further legislative action. Some of its provisions, however, can be implemented only through appropriate laws enacted
by the Legislature, hence not self-executing. Courts as a rule consider the provisions of the Constitution as self-executing,
rather than as requiring future legislation for their enforcement. 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. 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.
2. ID.; ID.; PROVISIONS ARE NOT SELF-EXECUTING WHERE IT MERELY ANNOUNCES A POLICY AND EMPOWERS THE
LEGISLATURE TO ENACT LAWS TO CARRY THE POLICY INTO EFFECT. 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.

3. ID.; ID.; FIRST PARAGRAPH OF SECTION 10, ARTICLE 12 NOT SELF-EXECUTING. The first paragraph directs
Congress to reserve certain areas of investments in the country to Filipino citizens or to corporations sixty per cent 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 the 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.
4. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS UNDER PARAGRAPHS 2 AND 3 OF SECTION
10, ARTICLE 12, SELF-EXECUTING. 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.
5. ID.; ID.; ID.; MANILA HOTEL CORPORATION, PART OF THE NATIONAL PATRIMONY. 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. 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.
6. ID.; STATE; GSIS, EMBRACED WITHIN THE MEANING THEREOF. 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. The funds are held in trust for a distinct purpose which cannot be disposed of indifferently. 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. Excess funds, however, are allowed to be invested in business and other ventures
for the benefit of the employees. The GSIS is 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 and the Commission on Audit. As a state-owned and controlled corporation, 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.
7. ID.; CONSTITUTION; PROVISIONS THEREOF DEEMED INCLUDED IN ALL LEGISLATIONS AND ALL STATE ACTIONS.
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.
8. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS; STATE NOT PROHIBITED FROM GRANTING
RIGHTS TO FOREIGN FIRM IN THE ABSENCE OF QUALIFIED FILIPINOS. 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 weal of
the nation.
9. ID.; ID.; ID.; ID.; CASE AT BAR. 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 for any reason, the highest
bidder cannot be awarded the block of shares . . . ." No reason has arisen that will prevent the award to Renong Berhad. 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 longitude of the right of preference as
defined by the rules. 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 a State action amounts to a denial of the right that the Court can come in and strike down the
denial as unconstitutional.

10. REMEDIAL LAW; ACTIONS; ESTOPPEL; PARTY ESTOPPED FROM ASSAILING THE WINNING BID OF FOREIGN FIRM
FROM BEING AWARE OF THE RULES AND REGULATIONS OF THE BIDDINGS IT AGREED TO RESPECT. 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 on the essence of bidding.

PANGANIBAN, J., separate dissenting opinion:
POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION; PREFERENCE TO QUALIFIED FILIPINOS; LOSING
FILIPINO NOT GIVEN RIGHT TO EQUAL THE HIGHEST FOREIGN BID. The majority contends the Constitution should
be interpreted to mean that, after a bidding process is concluded, the losing Filipino bidder should be given the right to
equal the highest foreign bid, and thus to win. However, the Constitution [Sec. 10 (2), Art. XII] simply states that "in the
grant of rights . . . covering the national economy and patrimony, the State shall give preference to qualified Filipinos."
The majority concedes that there is no law defining the extent or degree of such preference. Specifically, no statute
empowers a losing Filipino bidder to increase his bid and equal that of the winning foreigner. In the absence of such
empowering law, the majority's strained interpretation, I respectfully submit, constitutes unadulteratedjudicial
legislation, which makes bidding a ridiculous sham where no Filipino can lose and where no foreigner can win. Only in the
Philippines! Aside from being prohibited by the Constitution, such judicial legislation is short-sighted and, viewed
properly, gravely prejudicial to long-term Filipino interests. In the absence of a law specifying the degree or extent of the
"Filipino First" policy of the Constitution, the constitutional preference for the "qualified Filipinos" may be allowed only
where all the bids are equal. In this manner, we put the Filipino ahead without self-destructing him and without being
unfair to the foreigner. In short, the Constitution mandates a victory for the qualified Filipino only when the scores are
tied. But not when the ballgame is over and the foreigner clearly posted the highest score.

D E C I S I O N
BELLOSILLO, J p:

The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, and concessions covering
the national economy and patrimony, the State shall give preference to qualified Filipinos, 1 is invoked by petitioner in its
bid to acquire 51% of the shares of the Manila HotelCorporation (MHC) which owns the historic Manila Hotel. Opposing,
respondents maintain that the provision is not self-executing but requires an implementing legislation for its
enforcement. Corollarily, they ask whether the 51% shares form part of the national economy and patrimony covered by
the protective mantle of the Constitution.

The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization
program of the Philippine Government under Proclamation No. 50 dated 8 December 1986, decided to sell through
public bidding 30% to 51% of the issued and outstanding shares of respondent MHC. The winning bidder, or the
eventual "strategic partner," is to provide management expertise and/or an international marketing/reservation system,
and financial support to strengthen the profitability and performance of the Manila Hotel. 2 In a close bidding held on 18
September 1995 only two (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.
Pertinent provisions of the bidding rules prepared by respondent GSIS state
I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC
1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to
November 3, 1995) or the Highest Bidder will lose the right to purchase the Block of Shares
and GSIS will instead offer the Block of Shares to the other Qualified Bidders:
a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management
Contract, International Marketing/Reservation System Contract or other type of contract
specified by the Highest Bidder in its strategic plan for the Manila Hotel . . . .
b. The Highest Bidder must execute the Stock Purchase and Sale Agreement
with GSIS . . . .
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER
The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following
conditions are met

a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995 (reset
to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/
OGCC (Office of the Government Corporate Counsel) are obtained." 3
Pending the declaration of Renong Berhard as the winning bidder/strategic partner and the execution of the necessary
contracts, petitioner in a letter to respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per share
tendered by Renong Berhad. 4 In a subsequent letter dated 10 October 1995 petitioner sent a manager's check issued by
Philtrust Bank for Thirty-three Million Pesos (P33,000,000.00) as Bid Security to match the bid of the Malaysian Group,
Messrs. Renong Berhad . . . . 5 which respondent GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and
that the sale of 51% of the MHC may be hastened by respondent GSIS and consummated with Renong Berhad, petitioner
came to this Court on prohibition and mandamus. On 18 October 1995 the Court issued a temporary restraining order
enjoining respondents from perfecting and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the First
Division. The case was then set for oral arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G.
Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits 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 to release the full potential of the
Filipino people. To all intents and purposes, it has become a part of the national patrimony. 6 Petitioner also argues that
since 51% of the shares of the MHC carries with it the ownership of the business of the hotel which is owned by
respondent GSIS, a government-owned and controlled corporation, the hotel business of respondent GSIS being a part of
the tourism industry is unquestionably a part of the national economy. Thus, any transaction involving 51% of the shares
of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII,
1987 Constitution, applies. 7
It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also
unquestionably part of the national economy petitioner should be preferred after it has matched the bid offer of the
Malaysian firm. For the bidding rules mandate that if for any reason, the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer this to the 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. 8
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a
statement of principle and policy since it isnot a self-executing provision and requires implementing legislation(s). . . . Thus,
for the said provision to operate, there must be existing laws "to lay down conditions under which business may be done." 9
Second, granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which
only refers to lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna and all marine wealth in its territorial sea, and exclusive
marine zone as cited in the first and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents,
while petitioner speaks of the guests who have slept in the hotel and the events that have transpired therein which make
the hotel historic, these alone do not make the hotel fall under the patrimony of the nation. What is more, the mandate of
the Constitution is addressed to the State, not to respondent GSIS which possesses a personality of its own separate and
distinct from the Philippines as a State. lexlib
Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional provision invoked is still
inapplicable 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. Certainly, 51% of the equity of the MHC cannot be considered part of
the national patrimony. Moreover, if the disposition of the shares of the MHC is really contrary to the Constitution,
petitioner should have questioned it right from the beginning and not after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1, of the bidding rules which provides that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the 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, is
misplaced. Respondents postulate that the privilege of submitting a matching bid has not yet arisen since it only takes
place if for any reason, the Highest Bidder cannot be awarded the Block of Shares. Thus the submission by petitioner of a
matching bid is premature since Renong Berhad could still very well be awarded the block of shares and the condition
giving rise to the exercise of the privilege to submit a matching bid had not yet taken place.
Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since respondent GSIS did not
exercise its discretion in a capricious, whimsical manner, and if ever it did abuse its discretion it was not so patent and
gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the

petition for mandamus should fail as petitioner has no clear legal right to what it demands and respondents do not have
an imperative duty to perform the act required of them by petitioner.
We now resolve. 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. It has been defined as the
fundamental and paramount law of the nation. 10 It prescribes the permanent framework of a system of government,
assigns to the different departments their respective powers and duties, and establishes certain fixed principles on
which government is founded. The fundamental conception in other words is that it is a supreme law to which all other
laws must conform and in accordance with which all private rights must be determined and all public authority
administered. 11 Under the doctrine of constitutional supremacy, if a law or contract violates any norm of
the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into
by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is
the fundamental paramount and supreme law of the nation, it is deemed written in every statute and contract.

Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the
legislature to enact laws and carry out the purposes of the framers who merely establish an outline of government
providing for the different departments of the governmental machinery and securing certain fundamental and
inalienable rights of citizens. 12 A provision which lays down a general principle, such as those found in Art. II of the
1987Constitution, is usually not self-executing. But a provision which is complete in itself and becomes operative
without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means of which the
right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing if the
nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no language indicating that the subject is
referred to the legislature for action. 13
As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and
have often become in effect extensive codes of laws intended to operate directly upon the people in a manner similar to
that of statutory enactments, and the function of constitutional conventions has evolved into one more like that of a
legislative body. Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-executing. If the constitutional
provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore
and practically nullify the mandate of the fundamental law. 14This can be cataclysmic. That is why the prevailing view is,
as it has always been, that
. . . in case of doubt, the Constitution should be considered self-executing rather than non-self-
executing. . . . Unless the contrary is clearly intended, the provisions of the Constitution should be
considered self-executing, as a contrary rule would give the legislature discretion to determine when,
or whether, they shall be effective. These provisions would be subordinated to the will of the
lawmaking body, which could make them entirely meaningless by simply refusing to pass the needed
implementing statute. 15
Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they quote
from discussions on the floor of the 1986 Constitutional Commission
MR. RODRIGO.
Madam President, I am asking this question as the Chairman of the Committee on Style. If the
wording of "PREFERENCE" is given to "QUALIFIED FILIPINOS," can it be understood as a
preference to qualified Filipinos vis-a-vis Filipinos who are not qualified. So, why do we not
make it clear? To qualified Filipinos as against aliens?
THE PRESIDENT.
What is the question 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 or over
aliens?
MR. NOLLEDO.
Madam President, I think that is understood. We use the word "QUALIFIED" because the existing laws
or 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 (italics supplied by respondents).
MR RODRIGO.
It is just a matter of style.
MR. NOLLEDO.
Yes. 16

Quite apparently, Sec. 10, second par., 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 the self-executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers
directly granted by the constitution, further the operation of such a provision, prescribe a practice to be used for its
enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place
reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or
prescribe a penalty for the violation of a self-executing constitutional provision does not render such a provision
ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that
a self-executing provision of the constitution does not necessarily exhaust legislative power on the subject, but any
legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more
available. 17 Subsequent legislation however does not necessarily mean that the subject constitutional provision is not,
by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of
the first and third paragraphs of the same section which undoubtedly are not self-executing. 18 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. 19
Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles
and policies, which are basically not self-executing and only placed in the Constitution as moral incentives to legislation,
not as judicially enforceable rights are simply not in point. Basco v.Philippine Amusements and Gaming
Corporation 20 speaks of constitutional provisions on personal dignity, 21 the sanctity of family life, 22 the vital role of
the youth in nation-building, 23 the promotion of social justice, 24 and the values of education. 25 Tolentino v. Secretary
of Finance 26 refers to constitutional provisions on social justice and human rights 27 and on
education. 28 Lastly, Kilosbayan, Inc. v. Morato 29 cites provisions on the promotion of general welfare,30 the sanctity of
family life, 31 the vital role of the youth in nation-building 32 and the promotion of total human liberation and
development. 33 A reading of these provisions indeed clearly shows that they are not judicially enforceable
constitutional rights but merely guidelines for legislation. The very terms of the provisions manifest that they are only
principles upon which legislations must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., 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 Constitutiondeclares 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.
As regards our national patrimony, a member of the 1986 Constitutional Commission 34 explains
The patrimony of the Nation that should be conserved and developed refers not only to our rich
natural resources but also to the cultural heritage of our race. 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.
We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage. 35 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.
Manila Hotel has become a landmark a living testimonial of Philippine heritage. While it was restrictively an
American hotel when it first opened in 1912, it immediately evolved to be truly Filipino. Formerly a concourse for the
elite, it has since then become the venue of various significant events which have shaped Philippine history. It was called
the Cultural Center of the 1930's. It was the site of the festivities during the inauguration of the Philippine

Commonwealth. Dubbed as the Official Guest House of the Philippine Government it plays host to dignitaries and official
visitors who are accorded the traditional Philippine hospitality. 36

The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City. 37 During
World War II the hotel was converted by the Japanese Military Administration into a military headquarters. When the
American forces returned to recapture Manila the hotel was selected by the Japanese together with Intramuros as the
two (2) places for their final stand. Thereafter, in the 1950's and 1960's, the hotel became the center of political
activities, playing host to almost every political convention. In 1970 the hotel reopened after a renovation and reaped
numerous international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the
site of a failed coup d'etat where an aspirant for vice-president was "proclaimed" President of the Philippine Republic.
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. 38
The argument is pure sophistry. The term qualified Filipinos as used in our Constitution also includes corporations at
least 60% of which is owned by Filipinos. This is very clear from the proceedings of the 1986 Constitutional Commission

THE PRESIDENT.
Commissioner Davide is recognized.
MR. DAVIDE.
I would like to introduce an amendment to the Nolledo amendment. And the amendment
would consist in substituting the words "QUALIFIED FILIPINOS" with the following:
"CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL
OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH CITIZENS."
xxx xxx xxx
MR. MONSOD.
Madam President, apparently the proponent is agreeable, but we have to raise a question.
Suppose it is a corporation that is 80-percent Filipino, do we not give it preference?
MR. DAVIDE.
The Nolledo amendment would refer to an individual Filipino. What about a corporation
wholly owned by Filipino citizens?
MR. MONSOD.
At least 60 percent, Madam President.
MR. DAVIDE.
Is that the intention?
MR MONSOD.
Yes, because, in fact, we would be limiting it if we say that the preference should only be 100-
percent Filipino.
MR. DAVIDE.
I want to get that meaning clear because "QUALIFIED FILIPINOS" may refer only to
individuals and not to juridical personalities or entities.
MR. MONSOD.
We agree, Madam President. 39
xxx xxx xxx
MR. RODRIGO.
Before we vote, may I request that the amendment be read again.
MR. NOLLEDO.
The amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS
COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE
PREFERENCE TO QUALIFIED FILIPINOS." And the word "Filipinos" here, as intended by the
proponents, will include not only individual Filipinos but also Filipino-controlled entities or
entities fully-controlled by Filipinos. 40
The phrase preference to qualified Filipinos was explained thus

MR. FOZ.
Madam President, I would like to request Commissioner Nolledo to please restate his
amendment so that I can ask a question.
MR. NOLLEDO.
"IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL
ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED
FILIPINOS."
MR. FOZ.
In connection with that amendment, if a foreign enterprise is qualified and a Filipino
enterprise is also qualified, will the Filipino enterprise still be given a preference?
MR. NOLLEDO.
Obviously.
MR. FOZ.
If the foreigner is more qualified in some aspects than the Filipino enterprise, will the
Filipino still be preferred?
MR. NOLLEDO.
The answer is "yes."
MR. FOZ.
Thank you. 41
Expounding further on the Filipino First Policy provision Commissioner Nolledo continues
MR NOLLEDO.
Yes, Madam President. Instead of "MUST," it will be "SHALL THE STATE SHALL GIVE
PREFERENCE TO QUALIFIED FILIPINOS." This embodies the so-called "Filipino First" policy.
That means that Filipinos should be given preference in the grant of concessions, privileges
and rights covering the national patrimony. 42
The exchange of views in the sessions of the Constitutional Commission regarding the subject provision was still further
clarified by Commissioner Nolledo43
"Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all economic concerns. It is
better known as the FILIPINO FIRST Policy. . . . This provision was never found in previous
Constitutions. . . .
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
counterproductive 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."
Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of
the qualified bidders. It was pre-qualified by respondent GSIS in accordance with its own guidelines so that the sole
inference here is that petitioner has been found to be possessed of proven management expertise in the hotel industry,
or it has significant equity ownership in another hotel company, or it has an overall management and marketing
proficiency to successfully operate the Manila Hotel. 44
The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-
executory and requires implementing legislation is quite disturbing. The attempt to violate a clear constitutional
provision by the government itself is only too distressing. To adopt such a line of reasoning is to renounce the duty
to ensure faithfulness to the Constitution. For, even some of the provisions of the Constitution which evidently need
implementing legislation have juridical life of their own and can be the source of a judicial remedy. We cannot simply
afford the government a defense that arises out of the failure to enact further enabling, implementing or guiding
legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional government is apt
The executive department has a constitutional duty to implement laws, including the Constitution,
even before Congress acts provided that there are discoverable legal standards for executive
action. When the executive acts, it must be guided by its own understanding of the constitutional
command and of applicable laws. The responsibility for reading and understanding
the Constitution and the laws is not the sole prerogative of Congress. If it were, the executive would
have to ask Congress, or perhaps the Court, for an interpretation every time the executive is
confronted by a constitutional command. That is not how constitutional government operates. 45
Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by
itself possesses a separate and distinct personality. This argument again is at best specious. 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. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this 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. 46
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.
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.

Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be, impliedly
written in the bidding rules issued by respondent GSIS, lest the bidding rules be nullified for being violative of
the Constitution. It is a basic principle in constitutional law that all laws and contracts must conform with the
fundamental law of the land. Those which violate the Constitution lose their reason for being.
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. 47Certainly, 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 theFilipino
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.
This Court does not discount the apprehension that this policy may discourage foreign investors. But
the Constitution and laws of the Philippines are understood to be always open to public scrutiny. These are given factors
which investors must consider when venturing into business in a foreign jurisdiction. Any person therefore desiring to
do business in the Philippines or with any of its agencies or instrumentalities is presumed to know his rights and
obligations under the Constitution and the laws of the forum
The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad since
petitioner was well aware from the beginning that a foreigner could participate in the bidding is meritless. Undoubtedly,
Filipinos and foreigners alike were invited to the bidding. But foreigners may be awarded the sale only if no Filipino
qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign entity. In the case before us,
while petitioner was already preferred at the inception of the bidding because of the constitutional mandate, petitioner
had not yet matched the bid offered by Renong Berhad. Thus it did not have the right or personality then to compel
respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the foreign firm and the apparent
disregard by respondent GSIS of petitioner's matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the award has been finally
made. To insist on selling the ManilaHotel to foreigners when there is a Filipino group willing to match the bid of the
foreign group is to insist that government be treated as any other ordinary market player, and bound by its mistakes or
gross errors of judgment, regardless of the consequences to the Filipino people. The miscomprehension of
theConstitution is regrettable. Thus we would rather remedy the indiscretion while there is still an opportunity to do so

than let the government develop the habit of forgetting that the Constitution lays down the basic conditions and
parameters for its actions.
Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules,
respondent GSIS is left with no alternative but to award to petitioner the block of shares of MHC and to execute the
necessary agreements and documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents
with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly
constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be
used as a guideline for future legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate
guardian of the Constitution will never shun, under any reasonable circumstance, the duty of upholding the majesty of
the Constitution which it is tasked to defend. It is worth emphasizing that it is not the intention of this Court to impede
and diminish, much less undermine, the influx of foreign investments. Far from it, the Court encourages and welcomes
more business opportunities but avowedly sanctions the preference for Filipinos whenever such preference is ordained
by the Constitution. The position of the Court on this matter could have not been more appropriately articulated by Chief
Justice Narvasa
As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that
of the legislature or the executive about the wisdom and feasibility of legislation economic in nature,
the Supreme Court has not been spared criticism for decisions perceived as obstacles to economic
progress and development . . . in connection with a temporary injunction issued by the Court's First
Division against the sale of the Manila Hotel to a Malaysian Firm and its partner, certain statements
were published in a major daily to the effect that that injunction "again demonstrates that the
Philippine legal system can be a major obstacle to doing business here."
Let it be stated for the record once again that while it is no business of the Court to intervene in
contracts of the kind referred to or set itself up as the judge of whether they are viable or attainable, it
is its bounden duty to make sure that they do not violate the Constitution or the laws, or are not
adopted or implemented with grave abuse of discretion amounting to lack or excess of jurisdiction. It
will never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism. 48
Privatization of a business asset for purposes of enhancing its business viability and preventing further losses,
regardless of the character of the asset, should not take precedence over non-material values. A commercial, nay even a
budgetary, objective should not be pursued at the expense of national pride and dignity. For the Constitution enshrines
higher and nobler non-material values. Indeed, the Court will always defer to the Constitution in the proper governance
of a free society; after all, there is nothing so sacrosanct in any economic policy as to draw itself beyond judicial review
when the Constitution is involved. 49
Nationalism is inherent in the very concept of the Philippines being a democratic and republican state, with sovereignty
residing in the Filipino people and from whom all government authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can have no higher purpose. Any interpretation of any
constitutional provision must adhere to such basic concept. Protection of foreign investments, while laudable, is merely
a policy. It cannot override the demands of nationalism. 50
The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely
for the sake of privatization. We are not talking about an ordinary piece of property in a commercial district. We are
talking about a historic relic that has hosted many of the most important events in the short history of the Philippines as
a nation. We are talking about a hotel where heads of states would prefer to be housed as a strong manifestation of their
desire to cloak the dignity of the highest state function to their official visits to the Philippines. Thus the Manila Hotel has
played and continues to play a significant role as an authentic repository of twentieth century Philippine history and
culture. In this sense, it has become truly a reflection of the Filipino soul a place with a history of grandeur; a most
historical setting that has played a part in the shaping of a country. 51 cda
This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark
this Grand Old Dame of hotels in Asia to a total stranger. For, indeed, the conveyance of this epic exponent of the
Filipino psyche to alien hands cannot be less than mephistophelian for it is, in whatever manner viewed, a veritable
alienation of a nation's soul for some pieces of foreign silver. And so we ask: What advantage, which cannot be equally
drawn from a qualified Filipino, can be gained by the Filipinos if Manila Hotel and all that it stands for is sold to a
non-Filipino? How much of national pride will vanish if the nation's cultural heritage is entrusted to a foreign entity? On
the other hand, how much dignity will be preserved and realized if the national patrimony is safekept in the hands of
a qualified, zealous and well-meaning Filipino? This is the plain and simple meaning of the Filipino First Policy provision
of the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being
the elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution.

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE
ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from
selling 51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of
petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of
the Manila HotelCorporation at P44.00 per share and thereafter to execute the necessary agreements and documents to
effect the sale, to issue the necessary clearances and to do such other acts and deeds as may be necessary for the
purpose.

SO ORDERED
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ., concur.
Narvasa, C.J., I join Justice Puno in his dissent.
Padilla, Vitug, Mendoza, and Torrens, Jr., JJ., see concuring opinion.
Puno and Panganiban, JJ., please see separate (Dissenting) opinion.

Separate Opinions
PADILLA, J ., concurring:
I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would like to expound a bit more on the concept of national patrimony as
including within its scope and meaning institutions such as the Manila Hotel.
It is argued by petitioner that the Manila Hotel comes under "national patrimony" over which qualified Filipinos have the preference, in ownership and
operation. The Constitutional provision on point states:
"xxx xxx xxx
In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference
to qualified Filipinos." 1
Petitioner's argument, I believe, is well taken. Under the 1987 Constitution, "national patrimony" consists of the natural resources provided by
Almighty God (Preamble) in our territory (Article 1) consisting of land, sea, and air. 2 A study of the 1935 Constitution, where the concept of "national
patrimony" originated, would show that its framers decided to adopt the even more comprehensive expression "Patrimony of the Nation" in the belief
that the phrase encircles a concept embracing not only the natural resources of the country but practically everything that belongs to the Filipino
people, the tangible and the material as well as the intangible and the spiritual assets and possessions of the people. It is to be noted that the framers
did not stop with conservation. They knew that conservation alone does not spell progress; and that this may be achieved only through development
as a correlative factor to assure to the people not only the exclusive ownership, but also the exclusive benefits of their national patrimony. 3
Moreover, the concept of national patrimony has been viewed as referring not only to our rich natural resources but also to the cultural heritage of our
race.4
There is no doubt in my mind that the Manila Hotel is very much a part of our national patrimony and, as such deserves constitutional protection as to
who shall own it and benefit from its operation. This institution has played an important role in our nation's history, having been the venue of many a
historical event, and serving as it did, and as it does, as the Philippine Guest House for visiting foreign heads of state, dignitaries, celebrities, and
others. 5
It is therefore our duty to protect and preserve it for future generations of Filipinos. As President Manuel L. Quezon once said, we must exploit the
natural resources of our country, but we should do so with an eye to the welfare of the future generations. In other words, the leaders of today are the
trustees of the patrimony of our race. To preserve our national patrimony and reserve it for Filipinos was the intent of the distinguished gentlemen
who first framed our Constitution. Thus, in debating the need for nationalization of our lands and natural resources, one expounded that we should
"put more teeth into our laws, and; not make the nationalization of our lands and natural resources a subject of ordinary legislation but of
constitutional enactment." 6 To quote further: "Let not our children be mere tenants and trespassers in their own country. Let us preserve and
bequeath to them what is rightfully theirs, free from all foreign liens and encumbrances." 7
Now, a word on preference. In my view "preference to qualified Filipinos", to be meaningful, must refer not only to things that are peripheral,
collateral, or tangential. It must touch and affect the very "heart of the existing order." In the field of public bidding in the acquisition of things that
pertain to the national patrimony, preference to qualified Filipinos must allow a qualified Filipino to match or equal the higher bid of a non-Filipino;
the preference shall not operate only when the bids of the qualified Filipino and the non-Filipino are equal in which case, the award should
undisputedly be made to the qualified Filipino. The Constitutional preference should give the qualified Filipino an opportunity to match or equal the
higher bid of the non-Filipino bidder if the preference of the qualified Filipino bidder is to be significant at all.
It is true that in this present age of globalization of attitude towards foreign investments in our country, stress is on the elimination of barriers to
foreign trade and investment in the country. While government agencies, including the courts should re-condition their thinking to such a trend, and
make it easy and even attractive for foreign investors to come to our shores, yet we should not preclude ourselves from reserving to us Filipinos
certain areas where our national identity, culture and heritage are involved. In the hotel industry, for instance, foreign investors have established
themselves creditably, such as in the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should not stop us from retaining 51% of the
capital stock of the Manila HotelCorporation in the hands of Filipinos. This would be in keeping with the intent of the Filipino people to preserve our
national patrimony, including our historical and cultural heritage in the hands of Filipinos.
VITUG, J.:
I agree with Mr. Justice Josue N. Bellosillo on his clear-cut statements, shared by Mr. Justice Reynato S. Puno in a well written separate (dissenting)
opinion, that:
First, the provision in our fundamental law which provides that "(i)n the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos" 1 is self-executory. The provision verily does not need, although it can obviously be
amplified or regulated by, an enabling law or a set of rules.
Second, the term "patrimony" does not merely refer to the country's natural resources but also to its cultural heritage. A "historical landmark," to use
the words of Mr. Justice Justo P. Torres, Jr., Manila Hotel has now indeed become part of Philippine heritage.
Third, the act of the Government Service Insurance System ("GSIS"), a government entity which derives its authority from the State, in selling 51% of
its share in MHC should be considered an act of the State subject to the Constitutional mandate.
On the pivotal issue of the degree of "preference to qualified Filipinos," I find it somewhat difficult to take the same path traversed by the forceful
reasoning of Justice Puno. In the particular case before us, the only meaningful preference, it seems, would really be to allow the qualified Filipino to
match the foreign bid for, as a practical matter, I cannot see any bid that literally calls for millions of dollars to be at par (to the last cent) with another.

The magnitude of the bids is such that it becomes hardly possible for the competing bids to stand exactly "equal" which alone, under the dissenting
view, could trigger the right of preference.
It is most unfortunate that Renong Berhad has not been spared this great disappointment, a letdown that it did not deserve, by a simple and timely
advise of the proper rules of bidding along with the peculiar constitutional implications of the proposed transaction. It is also regrettable that the Court
at times is seen to, instead, be the refuge for bureaucratic inadequacies which create the perception that it even takes on non-justiciable
controversies. cdtai
All told, I am constrained to vote for granting the petition.
MENDOZA, J.:
I take the view that in the context of the present controversy the only way to enforce the constitutional mandate that "[i]n the grant of rights, privileges
and concessions covering the national patrimony the State shall give preference to qualified Filipinos" 1 is to allow petitioner Philippine corporation to
equal the bid of the Malaysian firm Renong Berhad for the purchase of the controlling shares of stocks in the Manila Hotel Corporation. Indeed, it is the
only way a qualified Filipino or Philippine corporation can be given preference in the enjoyment of a right, privilege or concession given by the State, by
favoring it over a foreign national or corporation.
Under the rules on public bidding of the Government Service and Insurance System, if petitioner and the Malaysian firm had offered the same price per
share, "priority [would be given] to the bidder seeking the larger ownership interest in MHC," 2 so that if petitioner bid for more shares, it would be
preferred to the Malaysian corporation for that reason and not because it is a Philippine corporation. Consequently, it is only in cases like the present
one, where an alien corporation is the highest bidder, that preferential treatment of the Philippine corporation is mandated not by declaring it winner
but by allowing it "to match the highest bid in terms of price per share" before it is awarded the shares of stocks. 3 That, to me, is what "preference to
qualified Filipinos" means in the context of this case by favoring Filipinos whenever they are at a disadvantage vis-a-vis foreigners.
This was the meaning given in Co Chiong v. Cuaderno 4 to a 1947 statute giving "preference to Filipino citizens in the lease of public market
stalls." 5 This Court upheld the cancellation of existing leases covering market stalls occupied by persons who were not Filipinos and the award
thereafter of the stalls to qualified Filipino vendors as ordered by the Department of Finance. Similarly, in Vda. de Salgado v. De la Fuente, 6 this Court
sustained the validity of a municipal ordinance passed pursuant to the statute (R.A. No. 37), terminating existing leases of public market stalls and
granting preference to Filipino citizens in the issuance of new licenses for the occupancy of the stalls. In Chua Lao v. Raymundo, 7 the preference
granted under the statute was held to apply to cases in which Filipino vendors sought the same stalls occupied by alien vendors in the public markets
even if there were available other stalls as good as those occupied by aliens. "The law, apparently, is applicable whenever there is a conflict of interest
between Filipino applicants and aliens for lease of stalls in public markets, in which situation the right to preference immediately arises." 8

Our legislation on the matter thus antedated by a quarter of a century efforts began only in the 1970's in America to realize the promise of equality,
through affirmative action and reverse discrimination programs designed to remedy past discrimination against colored people in such areas as
employment, contracting and licensing. 9 Indeed, in vital areas of our national economy, there are situations in which the only way to place Filipinos in
control of the national economy as contemplated in the Constitution 10 is to give them preferential treatment where they can at least stand on equal
footing with aliens.
There need be no fear that thus preferring Filipinos would either invite foreign retaliation or deprive the country of the benefit of foreign capital or
know-how. We are dealing here not with common trades or common means of livelihood which are open to aliens in our midst, 11 but with the sale of
government property, which is like the grant of government largess or benefits. In the words of Art. XII, sec. 10, we are dealing here with "rights,
privileges and concessions covering the national economy" and therefore no one should begrudge us if we give preferential treatment to our citizens.
That at any rate is the command of the Constitution. For the Manila Hotel is a business owned by the Government. It is being privatized. Privatization
should result in the relinquishment of the business in favor of private individuals and groups who are Filipino citizens, not in favor of aliens.
Nor should there be any doubt that by awarding the shares of stocks to petitioner we would be trading competence and capability for nationalism.
Both petitioner and the Malaysian firm are qualified, having hurdled the pre-qualification process. 12 It is only the result of the public bidding that is
sought to be modified by enabling petitioner to up its bid to equal the highest bid.
Nor, finally, is there any basis for the suggestion that to allow a Filipino bidder to match the highest bid of an alien could encourage speculation, since
all the Filipino entity would then do would be not to make a bid or make only a token one and, after it is known that a foreign bidder has submitted the
highest bid, make an offer matching that of the foreign firm. This is not possible under the rules on public bidding of the GSIS. Under these rules there
is minimum bid required (P36.67 per share for a range of 9 to 15 million shares). 13 Bids below the minimum will not be considered. On the other
hand, if the Filipino entity, after passing the pre-qualification process, does not submit a bid, he will not be allowed to match the highest bid of the
foreign firm because this is a privilege allowed only to those who have "validly submitted bids." 14 The suggestion is, to say the least, fanciful and has
no basis in fact.
For the foregoing reasons, I vote to grant the petition.
TORRES, JR., J.:
Constancy in law is not an attribute of a judicious mind. I say this as we are confronted in the case at bar with legal and constitutional issues and yet
I am driven so to speak on the side of history. The reason perhaps is due to the belief that in the words of Justice Oliver Wendell Holmes, Jr., a "page of
history is worth a volume of logic."
I will, however, attempt to share my thoughts on whether the Manila Hotel has a historical and cultural aspect within the meaning of
the constitution and thus, forming part of the "patrimony of the nation."
Section 10, Article XII of the 1987 Constitution provides :
xxx xxx xxx
"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 goals and priorities."
The foregoing provisions should be read in conjunction with Article II of the same Constitution pertaining to "Declaration of Principles and State
Policies" which ordain
"The State shall develop a self-reliant and independent national economy, effectively controlled by Filipinos." (Sec. 19).
Interestingly, the matter of giving preference to "qualified Filipinos" was one of the highlights in the 1987 Constitution Commission proceedings, thus:
xxx xxx xxx
"MR. NOLLEDO.
The Amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL
ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word
"Filipinos" here, as intended by the proponents, will include not only individual Filipinos but also Filipino-controlled
entities fully controlled by Filipinos (Vol. III, Records of the Constitutional, p. 608)
MR. MONSOD.

We also wanted to add, as Commissioner Villegas said, this committee and this body already approved what is known as the
Filipino First policy which was suggested by Commissioner de Castro. So that it is now in our Constitution (Vol. IV,
Records of the Constitutional Commission, p. 225).
Commissioner Jose Nolledo explaining the provision adverted to above, said:
"MR. NOLLEDO.
In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference
to qualified Filipinos.
MR. FOZ.
In connection with that amendment, if a foreign enterprise is qualified and the Filipinos enterprise is also qualified, will the
Filipino enterprise shall be given a preference?
MR. NOLLEDO.
Obviously.
MR. FOZ.
If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred?
MR. NOLLEDO.
The answer is "yes" (Vol. III p. 616, Records of the Constitutional Commission).
The nationalistic provisions of the 1987 Constitution reflect the history and spirit of the Malolos Constitution of 1898, the 1935 Constitution and the
1973 Constitutions. That we have not reneged on this nationalist policy is articulated in one of the earliest cases, this Court said
"The 'nationalistic tendency is manifested in various provisions of the Constitution. . . . It cannot therefore be said that a law
imbued with the same purpose and spirit underlying many of the provisions of the Constitution is unreasonable, invalid or
unconstitutional (Ichong, et al. vs. Hernandez, et al., 101 Phil. 1155).'"
I subscribe to the view that history, culture, heritage, and tradition are not legislated and is the product of events, customs, usages and practices. It is
actually a product of growth and acceptance by the collective mores of a race. It is the spirit and soul of a people.
The Manila Hotel is part of our history, culture and heritage. Every inch of the Manila Hotel is witness to historic events (too numerous to mention)
which shaped our history for almost 84 years.
As I intimated earlier, it is not my position in this opinion, to examine the single instances of the legal largesse which have given rise to the controversy,
as I believe that has been exhaustively discussed in the ponencia. Suffice it to say at this point that the history of the Manila Hotel should not be placed
in the auction block of a purely business transaction, where profit subverts the cherished historical values of our people.
As a historical landmark in this "Pearl of the Orient Seas", it has its enviable tradition which, in the words of philosopher Salvador de Madarriaga,
(tradition) is "more of a river than a stone, it keeps flowing, and one must view the flow in both directions. If you look towards the hill from which the
river flows, you see tradition in the form of forceful currents that push the river or people towards the future; if you look the other way, you progress."
Indeed, tradition and progress are the same, for progress depends on the kind of tradition. Let us not jettison the tradition of the Manila Hotel and
thereby repeat our colonial history.
I grant, of course, that men of the law can see the same subject in different lights.
I remember, however, a Spanish proverb which says "He is always right who suspects that he makes mistakes". On this note, I say that if I have to
make a mistake, I would rather err upholding the belief that the Filipino is first under his Constitution and in his own land.
I vote to GRANT the petition.
PUNO, J., dissenting:
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,
theManila 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 GSISwas 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 pre-qualification documents and the bidding rules were furnished interested
parties. Petitioner Manila PrinceHotel, a domestic corporation, and Renong Berhad, a Malaysian firm with ITT Sheraton as operator, pre-qualified. 2
The bidding rules and procedures entitled "Guidelines and Procedures: Second Pre-qualification 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:
First Pass the prequalification process;
Second Submit the highest bid on a price per share basis for the Block of Shares;
Third Negotiate and execute the necessary contracts with GSIS/MHC not later than October 23, 1995.
xxx xxx xxx
IV. GUIDELINES FOR PREQUALIFICATION
A. PARTIES WHO MAY APPLY FOR PREQUALIFICATION
The Winning Bidder/Strategic Partner will be expected to provide management expertise and/or an international
marketing reservation, and financial support to strengthen the profitability and performance of The Manila Hotel. In this context,
the GSIS is inviting to the prequalification process any local and/or foreign corporation, consortium/joint venture or juridical
entity with at least one of the following qualifications:
a. Proven management expertise in the hotel industry; or
b. Significant equity ownership (i.e. board representation) in another hotel company; or
c. Overall management and marketing expertise to successfully operate the Manila Hotel.
Parties interested in bidding for MHC should be able to provide access to the requisite management expertise and/or international
marketing/reservation system for The Manila Hotel.
xxx xxx xxx
D. PREQUALIFICATION DOCUMENTS
xxx xxx xxx
E. APPLICATION PROCEDURE

1. DOCUMENTS AVAILABLE AT THE REGISTRATION OFFICE


The prequalification documents can be secured at the Registration Office between 9:00 AM to 4:00 PM during working days within
the period specified in Section III. Each set of documents consists of the following:
a. Guidelines and Procedures: Second Prequalification and Public Bidding of the MHC Privatization
b. Confidential Information Memorandum: The Manila Hotel Corporation
c. Letter of Invitation to the Prequalification and Bidding Conference
xxx xxx xxx
4 . PREQUALIFICATION AND BIDDING CONFERENCE
A prequalification and bidding conference will be held at The Manila Hotel on the date specified in Section III to allow the
Applicant to seek clarifications and further information regarding the guidelines and procedures. Only those who purchased the
prequalification documents will be allowed in this conference. Attendance to this conference is strongly advised, although the
Applicant will not be penalized if it does not attend.
5. SUBMISSION OF PREQUALIFICATION DOCUMENTS
The Applicant should submit 5 sets of the prequalification documents (1 original set plus 4 copies) at the Registration Office
between 9:00 AM to 4:00 PM during working days within the period specified in Section III.
F. PREQUALIFICATION PROCESS
1. The Applicant will be evaluated by the PBAC with the assistance of the TEC based on the Information Package and other
information available to the PBAC.
2. If the Applicant is a Consortium/Joint Venture, the evaluation will consider the overall qualifications of the group, taking into
account the contribution of each member to the venture
3. The decision of the PBAC with respect to the results of the PBAC evaluation will be final.
4 . The Applicant shall be evaluated according to the criteria set forth below:
a. Business management expertise, track record, and experience
b. Financial capability
c. Feasibility and acceptability of the proposed strategic plan for the Manila Hotel
5. The PBAC will shortlist such number of Applicants as it may deem appropriate.
6. The parties that prequalified in the first MHC public bidding ITT Sheraton, Marriot International Inc., Renaissance Hotels
International Inc., consortium of RCBC Capital/Ritz Carlton may participate in the Public Bidding without having to undergo
the prequalification process again.
G. SHORTLIST OF QUALIFIED BIDDERS
1. A notice of prequalification results containing the shortlist of Qualified Bidders will be posted at the Registration Office at the
date specified in Section III.
2. In the case of a Consortium/Joint Venture, the withdrawal by a member whose qualification was a material consideration for
being included in the shortlist is a ground for disqualification of the Applicant.
V. GUIDELINES FOR THE PUBLIC BIDDING
A. PARTIES WHO MAY PARTICIPATE IN THE PUBLIC BIDDING
All parties in the shortlist of Qualified Bidders will be eligible to participate in the Public Bidding.
B. BLOCK OF SHARES
A range of Nine Million (9,000,000) to Fifteen Million Three Hundred Thousand (15,300,000) shares of stock, representing Thirty
Percent to Fifty-One Percent (30%-51%) of the issued and outstanding shares of MHC, will be offered in the Public Bidding by
the GSIS. The Qualified Bidders will have the option of determining the number of shares within the range to bid for. The range is
intended to attract bidders with different preferences and objectives for the operation and management of The Manila Hotel.
C. MINIMUM BID REQUIRED ON A PRICE PER SHARE BASIS
1. Bids will be evaluated on a price per share basis. The minimum bid required on a price per share basis for the Block of Shares is
Thirty-Six Pesos and Sixty-Seven Centavos (P36.67).
2 . Bids should be in the Philippine currency payable to the GSIS.
3. Bids submitted with an equivalent price per share below the minimum required will not considered.
D. TRANSFER COSTS
xxx xxx xxx
E. OFFICIAL BID FORM
1. Bids must be contained in the prescribed Official Bid Form, a copy of which is attached as Annex IV. The Official Bid Form
must be properly accomplished in all details; improper accomplishment may be a sufficient basis for disqualification.
2. During the Public Bidding, the Qualified Bidder will submit the Official Bid Form, which will indicate the offered purchase
price, in a sealed envelope marked "OFFICIAL BID."
F. SUPPORTING DOCUMENTS
During the Public Bidding, the following documents should be submitted along with the bid in a separate envelop marked
"SUPPORTING DOCUMENTS":
1. WRITTEN AUTHORITY TO BID (UNDER OATH)
If the Qualified Bidder is a corporation, the representative of the Qualified Bidder should submit a Board resolution which
adequately authorizes such representative to bid for and in behalf of the corporation with full authority to perform such acts
necessary or requisite to bind the Qualified Bidder.
If the Qualified Bidder is a Consortium/Joint Venture, each member of the Consortium/Joint Venture should submit a Board
resolution authorizing one of its members and such member's representative to make the bid on behalf of the group with full
authority to perform such acts necessary or requisite to bind the Qualified Bidder.
2. BID SECURITY
a. The Qualified Bidder should deposit Thirty-Three Million Pesos (P33,000.00), in Philippine currency as Bid Security in the
form of:
i. Manager's check or unconditional demand draft payable to the "Government Service Insurance System" and issued
by a reputable banking institution duly licensed to do business in the Philippines and acceptable to GSIS; or
ii. Standby-by letter of credit issued by a reputable banking institution acceptable to the GSIS.
b. The GSIS will reject a bid if :
i. The bid does not have a Bid Security; or
ii. The Bid Security accompanying the bid is for less than the required amount

c. If the Bid Security is in the form of a manager's check or unconditional demand draft, the interest earned on the Bid Security
will be for the account of GSIS.
d. If the Qualified Bidder becomes the Winning Bidder/Strategic Partner, the Bid Security will be applied as the downpayment
on the Qualified Bidder's offered purchase price.
e. The Bid Security of the Qualified Bidder will be returned immediately after the Public Bidding if the Qualified Bidder is not
declared the Highest Bidder.
f. The Bid Security will be returned by October 23, 1995 if the Highest Bidder is unable to negotiate and execute
with GSIS/MHC the Management Contract, International Marketing/Reservation System Contract or other types of contract
specified by the Highest Bidder in its strategic plan for The ManilaHotel.
g. The Bid Security of the Highest Bidder will be forfeited in favor of GSIS if the Highest Bidder, after negotiating and executing
the Management Contract, International Marketing/Reservation System Contract or other types of contract specified by the
Highest Bidder in its strategic plan for The ManilaHotel, fails or refuses to:
i. Execute the Stock Purchase and Sale Agreement with GSIS not later than October 23, 1995; or
ii. Pay the full amount of the offered purchase price not later than October 23, 1995; or
iii. Consummate the sale of the Block of Shares for any other reason.
G. SUBMISSION OF BIDS
1. The Public Bidding will be held on September 7, 1995 at the following location:
New GSIS Headquarters Building
Financial Center, Reclamation Area
Roxas Boulevard, Pasay City, Metro Manila
2. The Secretariat of the PBAC will be stationed at the Public Bidding to accept any and all bids and supporting requirements.
Representatives from the Commission on Audit and COP will be invited to witness the proceedings.
3. The Qualified Bidder should submit its bid using the Official Bid Form. The accomplished Official Bid Form should be
submitted in a sealed envelope marked "OFFICIAL BID."
4. The Qualified Bidder should submit the following documents in another sealed envelope marked "SUPPORTING BID
DOCUMENTS"
a. Written Authority Bid
b. Bid Security
5. The two sealed envelopes marked "OFFICIAL BID" and "SUPPORTING BID DOCUMENTS" must be submitted simultaneously
to the Secretariat between 9:00 AM and 2:00 PM, Philippine Standard Time, on the date of the Public Bidding. No bid shall be
accepted after the closing time. Opened or tampered bids shall not be accepted.
6. The Secretariat will log and record the actual time of submission of the two sealed envelopes. The actual time of submission
will also be indicated by the Secretariat on the face of the two envelopes.

7. After Step No. 6, the two sealed envelopes will be dropped in the corresponding bid boxes provided for the purpose. These
boxes will be in full view of the invited public.
H. OPENING AND READING OF BIDS
1. After the closing time of 2:00 PM on the date of the Public Bidding, the PBAC will open all sealed envelopes
marked "SUPPORTING BID DOCUMENTS"for screening, evaluation and acceptance. Those who submitted incomplete/insufficient
documents or document/s which is/are not substantially in the form required by PBAC will be disqualified. The envelope
containing their Official Bid Form will be immediately returned to the disqualified bidders.
2. The sealed envelopes marked "OFFICIAL BID" will be opened at 3:00 PM. The name of the bidder and the amount of its bid price
will be read publicly as the envelopes are opened.
3. Immediately following the reading of the bids, the PBAC will formally announce the highest bid and the Highest Bidder.
4 . The highest bid will be determined on a price per share basis. In the event of a tie wherein two or more bids have the same
equivalent price per share, priority will be given to the bidder seeking the larger ownership interest in MHC.
5. The Public Bidding will be declared a failed bidding in case:
a. No single bid is submitted within the prescribed period; or
b. There is only one (1) bid that is submitted and acceptable to the PBAC.
I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC
1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 or the Highest Bidder will lose the
right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders:
a. The Highest Bidder must negotiate and execute with GSIS/MHC the Management Contract, International Marketing/
Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan for The Manila Hotel. If
the Highest Bidder is intending to provide only financial support to The Manila Hotel, a separate institution may enter into the
aforementioned contract/s with GSIS/MHC.
b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS, a copy of which will be distributed to each of
the Qualified Bidder after the prequalification process is completed.
2. In the event that the Highest Bidder chooses a Management Contract for The Manila Hotel, the maximum levels for the
management fee structure that GSIS/MHC are prepared to accept in the Management Contract are as follows :
a. Basic management fee: Maximum of 2 .5% of gross revenues.(1)
b. Incentive fee: Maximum of 8 .0% of gross operating profit (1) after deducting undistributed overhead expenses and the basic
management fee.
c. Fixed component of the international marketing/reservation system fee: Maximum of 2.0% of gross room revenues.(1) The
Applicant should indicate in its Information Package if it is wishes to charge this fee.
Note (1): As defined in the uniform system of account for hotels.
The GSIS/MHC have indicated above the acceptable parameters for the hotel management fees to facilitate the negotiations
with the Highest Bidder for the Management Contract after the Public Bidding.
A Qualified Bidder envisioning a Management Contract for The Manila Hotel should determine whether or not the management
fee structure above is acceptable before submitting their prequalification documents to GSIS.
J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS
1 . If for any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders
that have validly submitted bids provided that these Qualified are willing to match the highest bid in terms of price per share.

2 . The order of priority among the interested Qualified Bidders will be in accordance with the equivalent price per share of their
respective bids in the Public Bidding, i.e. first and second priority will be given to the Qualified Bidders that submitted the second
and third highest bids on the price per share basis, respectively, and so on.
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER
The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met:
a. Execution of the necessary contract with GSIS/MHC not later than October 23, 1995; and
b. Requisite approvals from the GSIS/MHC and COP/OGCC are obtained.
I. FULL PAYMENT FOR THE BLOCK OF SHARES
1. Upon execution of the necessary contracts with GSIS/MHC, the Winning Bidder/Strategic Partner must fully pay, not later
than October 23, 1995, the offered purchase price for the Block of Shares after deducting the Bid Security applied as
downpayment.
2. All payments should be made in the form of a Manager's Check or unconditional Demand Draft, payable to the "Government
Service Insurance System," issued by a reputable banking institution licensed to do business in the Philippines and acceptable
to GSIS.
M. GENERAL CONDITIONS
1. The GSIS unconditionally reserves the right to reject any or all applications, waive any formality therein, or accept such
application as maybe considered most advantageous to the GSIS. The GSIS similarly reserves the right to require the submission of
any additional information from the Applicant as the PBAC may deem necessary.
2. The GSIS further reserves the right to call off the Public Bidding prior to acceptance of the bids and call for a new public bidding
under amended rules, and without any liability whatsoever to any or all the Qualified Bidders, except the obligation to return the
Bid Security.
3. The GSIS reserves the right to reset the date of the prequalification/bidding conference, the deadline for the submission of the
prequalification documents, the date of the Public Bidding or other pertinent activities at least three (3) calendar days prior to the
respective deadlines/target dates.
4. The GSIS sells only whatever rights, interest and participation it has on the Block of Shares.
5. All documents and materials submitted by the Qualified Bidders, except the Bid Security, may be returned upon request.
6. The decision of the PBAC/GSIS on the results of the Public Bidding is final. The Qualified Bidders, by participating in the Public
Bidding, are deemed to have agreed to accept and abide by these results.
7. The GSIS will be held free and harmless from any liability, suit or allegation arising out of the Public Bidding by the Qualified
Bidders who have participated in the Public Bidding." 3
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 Constitution 4 on the "National Economy and Patrimony" which
provides:
"xxx xxx xxx
In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference
to qualified Filipinos.
xxx xxx xxx"
The vital issues can be summed up as follows:
(1) Whether section 10, paragraph 2 of Article XII of the Constitution is a self-executing provision and does not need
implementing legislation to carry it into effect;
(2) Assuming section 10, paragraph 2 of 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 section 10, paragraph 2 of Article XII of
the Constitution;
(4) Assuming GSIS is part of the State, whether it failed to give preference to petitioner, a qualified Filipino corporation, over
and above Renong Berhad, a foreign corporation, in the sale of the controlling shares of the Manila Hotel Corporation;
(5) Whether petitioner is estopped from questioning the sale of the shares to Renong Berhad, a foreign corporation.
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 ourConstitution entitled "Declaration of Principles and State Policies" should generally be construed as mere statements of principles of the

State. 20 We have also ruled that some provisions of Article XIII on "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 for legislation 23 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: cdasia
"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 country 25 to Filipino citizens or to corporations sixty per cent 26 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 the
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 esse. Congress has to breathe 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 to 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 Hotelfalls 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 of the Manila Hotel to our history and culture cannot be viewed with a myopic eye. The value of
the 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 occupiedManila, it served as military headquarters and lodging for 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
housed 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 486, "he Cultural Properties Preservation and Protection Act," 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 is 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 controlled corporation, 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 deliberations 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:
"xxx xxx xxx

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 or
the setting up of other financial structures, et cetera.
MR. RODRIGO.
It is just a matter of style.
MR. NOLLEDO.
Yes.
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.
xxx xxx xxx"
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 of preference which GSIS should have accorded petitioner, a 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 of 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
theConstitution 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 weal 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
tensionbetween two desiderata first, the need to develop our economy and patrimony with the help of foreigners if necessary, and, second, the need
to keep our economy controlled by Filipinos. 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 is entitled to as 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 for any reason, the highest bidder cannot be awarded the block of shares . . ." 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 petitionerbut the court has no power to extend the latitude and longitude 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 a 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 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 on 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 the 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 can be pro-Filipino without unfairness to foreigners.
I vote to dismiss the petition.
PANGANIBAN, J ., dissenting:
I regret I cannot join the majority. To the incisive Dissenting Opinion of Mr. Justice Reynato S. Puno, may I just add:
1. The majority contends the Constitution should be interpreted to mean that, after a bidding process is concluded, the losing Filipino bidder should be
given the right to equal the highest foreign bid, and thus to win. However, the Constitution [Sec. 10 (2), Art. XII] simply states that "in the grant of rights
. . . covering the national economy and patrimony, the State shall give preference to qualified Filipinos." The majority concedes that there is no
law defining the extent or degree of such preference. Specifically, no statute empowers a losing Filipino bidder to increase his bid and equal that of the
winning foreigner. In the absence of such empowering law, the majority's strained interpretation, I respectfully submit, constitutes
unadulterated judicial legislation, which makes bidding a ridiculous sham where no Filipino can lose and where no foreigner can win. Only in the
Philippines!

2. Aside from being prohibited by the Constitution, such judicial legislation is short-sighted and, viewed properly, gravely prejudicial to long-term
Filipino interests. It encourages other countries in the guise of reverse comity or worse, unabashed retaliation to discriminate against us in their
own jurisdictions by authorizing their own nationals to similarly equal and defeat the higher bids of Filipino enterprises solely, while on the other
hand, allowing similar bids of other foreigners to remain unchallenged by their nationals. The majority's thesis will thus marginalize Filipinos as pariahs
in the global marketplace with absolutely no chance of winning any bidding outside our country. Even authoritarian regimes and hermit kingdoms have
long ago found out that unfairness, greed and isolation are self-defeating and in the long-term, self-destructing. cda
The moral lesson here is simple: Do not do unto others what you do not want others to do unto you.
3. In the absence of a law specifying the degree or extent of the "Filipino First" policy of the Constitution, the constitutional preference for the
"qualified Filipinos" may be allowed only where all the bids are equal. In this manner, we put the Filipino ahead without self-destructing him and
without being unfair to the foreigner.
In short, the Constitution mandates a victory for the qualified Filipino only when the scores are tied. But not when the ballgame is over and the
foreigner clearly posted the highest score.