Supremacy of the Constitution Filipino First Policy National Patrimony Qualified

Filipinos

Pursuant to the privatization program of the government, GSIS decided to sell 30-51% of

the Manila Hotel Corporation. Two bidders participated, MPH and Malaysian Firm Renong

Berhad. MPHs bid was at P41.58/per share while RBs bid was at P44.00/share. RB was

the highest bidder hence it was logically considered as the winning bidder but is yet to be

declared so. Pending declaration, MPH matches RBs bid and invoked the Filipino First

policy enshrined under par. 2, Sec. 10, Art. 12 of the 1987 Constitution**, but GSIS refused

to accept. In turn MPH filed a TRO to avoid the perfection/consummation of the sale to RB.

RB then assailed the TRO issued in favor of MPH arguing among others that:

1. Par. 2, Sec. 10, Art. 12 of the 1987 Constitution needs an implementing law because it is

merely a statement of principle and policy (not self-executing);

2. Even if said passage is self-executing, Manila Hotel does not fall under national patrimony.

ISSUE: Whether or not RB should be admitted as the highest bidder and hence be

proclaimed as the legit buyer of shares.

HELD: No. MPH should be awarded the sale pursuant to Art 12 of the 1987 Const. This is

in light of the Filipino First Policy.

Par. 2, Sec. 10, Art. 12 of the 1987 Constitution is self executing. The Constitution is the

fundamental, paramount and supreme law of the nation, it is deemed written in every

statute and contract.

Manila Hotel falls under national patrimony. Patrimony in its plain and ordinary meaning

pertains to heritage. When the Constitution speaks of national patrimony, it refers not only

to the natural resources of the Philippines, as the Constitution could have very well used the

term natural resources, but also to the cultural heritage of the Filipinos. It also refers to our

intelligence in arts, sciences and letters. Therefore, we should develop not only our lands,

forests, mines and other natural resources but also the mental ability or faculty of our

people. Note that, for more than 8 decades (9 now) Manila Hotel has bore mute witness to

the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed

with public interest; its own historicity associated with our struggle for sovereignty,

independence and nationhood.

Herein resolved as well is the term Qualified Filipinos which not only pertains to individuals

but to corporations as well and other juridical entities/personalities. The term qualified

Filipinos simply means that preference shall be given to those citizens who can make a

viable contribution to the common good, because of credible competence and efficiency. It

certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or

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

would be counter productive and inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be

made between a qualified foreigner and a qualified Filipino, the latter shall be chosen

over the former.

**Section 10. The Congress shall, upon recommendation of the economic and planning

agency, when the national interest dictates, reserve to citizens of the Philippines or to

corporations or associations at least sixty per centum of whose capital is owned by such

citizens, or such higher percentage as Congress may prescribe, certain areas of

investments. The Congress shall enact measures that will encourage the formation and

operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and

patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national

jurisdiction and in accordance with its national goals and priorities.

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

D E C I S I O N (En Banc)

PANGANIBAN, J.: I. THE FACTS

Petitioners Senators Taada, et al. questioned the constitutionality of the concurrence by the Philippine Senate of the Presidents ratification of the international Agreement establishing the World Trade Organization (WTO). They argued that the WTO Agreement violates the mandate of the 1987 Constitution to develop a self-reliant and independent national economy effectively controlled by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and locally produced goods. Further, they contended that the national treatment and parity provisions of the WTO Agreement place nationals and products of member countries on the same footing as Filipinos and local products, in contravention of the Filipino First policy of our Constitution, and render meaningless the phrase effectively controlled by Filipinos. II. THE ISSUE

Does the 1987 Constitution prohibit our country from participating in worldwide trade

liberalization and economic globalization and from integrating into a global economy that is liberalized, deregulated and privatized?

III. THE RULING

[The Court DISMISSED the petition. It sustained the concurrence of the Philippine Senate of the Presidents ratification of the Agreement establishing the WTO.]

NO, the 1987 Constitution DOES NOT prohibit our country from participating in

worldwide trade liberalization and economic globalization and from integrating into a global economy that is liberalized, deregulated and privatized.

There are enough balancing provisions in the Constitution to allow the Senate to ratify the

Philippine concurrence in the WTO Agreement. [W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor

and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either.In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.

xxx xxx xxx [T]he constitutional policy of a self-reliant and independent national economy does not

necessarily rule out the entry of foreign investments, goods and services. It contemplates neither economic seclusion nor mendicancy in the international community. As explained by Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence on external assistance for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means avoiding mendicancy in the international community. Independence refers to the freedom from undue foreign control of the national economy, especially in such strategic industries as in the development of natural resources and public utilities.

The WTO reliance on most favored nation, national treatment, and trade without

discrimination cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on equality and reciprocity, the fundamental law encourages industries that are competitive in both domestic and foreign markets, thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire.

xxx xxx xxx It is true, as alleged by petitioners, that broad constitutional principles require the State to

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

welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity and the promotion of industries which are competitive in both domestic and foreign markets, thereby justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is balanced by the adoption of the generally accepted principles of international law as part of the law of the land and the adherence of the Constitution to the policy of cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its

consent to the WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its sovereign duty and power. We find no patent and gross arbitrariness or despotism by reason of passion or personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its members, may even agree with petitioners that it is more advantageous to the national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own judicial power and duty. Ineludibly, what the Senate did was a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the elected policy makers and the people. As to whether the nation should join the worldwide march toward trade liberalization and economic globalization is a matter that our people should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of a member.