Statcon Full

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 83896 February 22, 1991

CIVIL LIBERTIES UNION, petitioner,vs.THE EXECUTIVE SECRETARY, respondent.

G.R. No. 83815 February 22, 1991

ANTI-GRAFT LEAGUE OF THE PHILIPPINES, INC. and CRISPIN T. REYES,petitioners,vs.

PHILIP ELLA C. JUICO, as Secretary of Agrarian Reform; CARLOS DOMINGUEZ, as Secretaryof Agriculture; LOURDES QUISUMBING, as Secretary of Education, Culture and Sports;FULGENCIO FACTORAN, JR., as Secretary of Environment and Natural Resources; VICENTEV. JAYME, as Secretary of Finance; SEDFREY ORDOEZ, as Secretary of Justice; FRANKLINN. DRILON, as Secretary of Labor and Employment; LUIS SANTOS, as Secretary of LocalGovernment; FIDEL V. RAMOS, as Secretary of National Defense; TEODORO F. BENIGNO, asPress Secretary; JUANITO FERRER, as Secretary of Public Works and Highways; ANTONIOARRIZABAL, as Secretary of Science and Technology; JOSE CONCEPCION, as Secretary ofTrade and Industry; JOSE ANTONIO GONZALEZ, as Secretary of Tourism; ALFREDO R.A.BENGZON, as Secretary of Health; REINERIO D. REYES, as Secretary of Transportation andCommunication; GUILLERMO CARAGUE, as Commissioner of the Budget; and SOLITAMONSOD, as Head of the National Economic Development Authority, respondents.

Ignacio P. Lacsina, Luis R. Mauricio, Antonio R. Quintos and Juan T. David for petitioners in 83896.

Antonio P. Coronel for petitioners in 83815.

FERNAN, C.J.:p

These two (2) petitions were consolidated per resolution dated August 9, 1988 1and are beingresolved jointly as both seek a declaration of the unconstitutionality of Executive Order No. 284 issued byPresident Corazon C. Aquino on July 25, 1987. The pertinent provisions of the assailed Executive Orderare:

Sec. 1. Even if allowed by law or by the ordinary functions of his position, a memberof the Cabinet, undersecretary or assistant secretary or other appointive officials ofthe Executive Department may, in addition to his primary position, hold not more thantwo positions in the government and government corporations and receive thecorresponding compensation therefor; Provided, that this limitation shall not apply toad hoc bodies or committees, or to boards, councils or bodies of which the Presidentis the Chairman.


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Sec. 2. If a member of the cabinet, undersecretary or assistant secretary or otherappointive official of the Executive Department holds more positions than what isallowed in Section 1 hereof, they (sic) must relinquish the excess position in favor ofthe subordinate official who is next in rank, but in no case shall any official hold morethan two positions other than his primary position.

Sec. 3. In order to fully protect the interest of the government in government-ownedor controlled corporations, at least one-third (1/3) of the members of the boards ofsuch corporation should either be a secretary, or undersecretary, or assistantsecretary.

Petitioners maintain that this Executive Order which, in effect, allows members of the Cabinet, theirundersecretaries and assistant secretaries to hold other government offices or positions in additionto their primary positions, albeit subject to the limitation therein imposed, runs counter to Section 13,

Article VII of the 1987 Constitution, 2which provides as follows:

Sec. 13. The President, Vice-President, the Members of the Cabinet, and theirdeputies or assistants shall not, unless otherwise provided in this Constitution, hold

any other office or employment during their tenure. They shall not, during saidtenure, directly or indirectly practice any other profession, participate in any business,or be financially interested in any contract with, or in any franchise, or specialprivilege granted by the Government or any subdivision, agency, or instrumentalitythereof, including government-owned or controlled corporations or their subsidiaries.They shall strictly avoid conflict of interest in the conduct of their office.

It is alleged that the above-quoted Section 13, Article VII prohibits public respondents, as membersof the Cabinet, along with the other public officials enumerated in the list attached to the petitions as

Annex "C" in G.R. No.83815 3and as Annex "B" in G.R. No. 83896 4from holding any other office or employment during theirtenure. In addition to seeking a declaration of the unconstitutionality of Executive Order No. 284,petitioner Anti-Graft League of the Philippines further seeks in G.R. No. 83815 the issuance of the

extraordinary writs of prohibition and mandamus, as well as a temporary restraining order directing publicrespondents therein to cease and desist from holding, in addition to their primary positions, dual ormultiple positions other than those authorized by the 1987 Constitution and from receiving any salaries,allowances, per diems and other forms of privileges and the like appurtenant to their questionedpositions, and compelling public respondents to return, reimburse or refund any and all amounts orbenefits that they may have received from such positions.

Specifically, petitioner Anti-Graft League of the Philippines charges that notwithstanding theaforequoted "absolute and self-executing" provision of the 1987 Constitution, then Secretary ofJustice Sedfrey Ordoez, construing Section 13, Article VII in relation to Section 7, par. (2), ArticleIX-B, rendered on July 23, 1987 Opinion No. 73, series of 1987, 5declaring that Cabinet members,their deputies (undersecretaries) and assistant secretaries may hold other public office, includingmembership in the boards of government corporations: (a) when directly provided for in the Constitution

as in the case of the Secretary of Justice who is made an ex-officiomember of the Judicial and BarCouncil under Section 8, paragraph 1, Article VIII; or (b) if allowed by law; or (c) if allowed by the primaryfunctions of their respective positions; and that on the basis of this Opinion, the President of thePhilippines, on July 25, 1987 or two (2) days before Congress convened on July 27, 1987: promulgatedExecutive Order No. 284. 6

Petitioner Anti-Graft League of the Philippines objects to both DOJ Opinion No. 73 and ExecutiveOrder No. 284 as they allegedly "lumped together" Section 13, Article VII and the general provisionin another article, Section 7, par. (2), Article I-XB. This "strained linkage" between the two provisions,


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each addressed to a distinct and separate group of public officersone, the President and herofficial family, and the other, public servants in generalallegedly "abolished the clearly separate,higher, exclusive, and mandatory constitutional rank assigned to the prohibition against multiple jobsfor the President, the Vice-President, the members of the Cabinet, and their deputies andsubalterns, who are the leaders of government expected to lead by example." 7Article IX-B, Section7, par. (2) 8provides:

Sec. 7. . . . . .

Unless otherwise allowed by law or by the primary functions of his position, noappointive official shall hold any other office or employment in the government or anysubdivision, agency or instrumentality thereof, including government-owned orcontrolled corporations or their subsidiaries.

The Solicitor General counters that Department of Justice DOJ Opinion No. 73, series of 1987, asfurther elucidated and clarified by DOJ Opinion No. 129, series of 1987 9and DOJ Opinion No. 155,series of 1988, 10being the first official construction and interpretation by the Secretary of Justice ofSection 13, Article VII and par. (2) of Section 7, Article I-XB of the Constitution, involving the same subjectof appointments or designations of an appointive executive official to positions other than his primaryposition, is "reasonably valid and constitutionally firm," and that Executive Order No. 284, promulgatedpursuant to DOJ Opinion No. 73, series of 1987 is consequently constitutional. It is worth noting that DOJOpinion No. 129, series of 1987 and DOJ Opinion No. 155, series of 1988 construed the limitationimposed by E.O. No. 284 as not applying to ex-officiopositions or to positions which, although not sodesignated as ex-officio are allowed by the primary functions of the public official, but only to the holdingof multiple positions which are not related to or necessarily included in the position of the public officialconcerned (disparate positions).

In sum, the constitutionality of Executive Order No. 284 is being challenged by petitioners on theprincipal submission that it adds exceptions to Section 13, Article VII other than those provided in theConstitution. According to petitioners, by virtue of the phrase "unless otherwise provided in thisConstitution," the only exceptions against holding any other office or employment in Government are

those provided in the Constitution, namely: (1) The Vice-President may be appointed as a Memberof the Cabinet under Section 3, par. (2), Article VII thereof; and (2) the Secretary of Justice is an ex-officiomember of the Judicial and Bar Council by virtue of Section 8 (1), Article VIII.

Petitioners further argue that the exception to the prohibition in Section 7, par. (2), Article I-XB on theCivil Service Commission applies to officers and employees of the Civil Service in general and thatsaid exceptions do not apply and cannot be extended to Section 13, Article VII which appliesspecifically to the President, Vice-President, Members of the Cabinet and their deputies orassistants.

There is no dispute that the prohibition against the President, Vice-President, the members of theCabinet and their deputies or assistants from holding dual or multiple positions in the Governmentadmits of certain exceptions. The disagreement between petitioners and public respondents lies on

the constitutional basis of the exception. Petitioners insist that because of the phrase "unlessotherwise provided in this Constitution" used in Section 13 of Article VII, the exception must beexpressly provided in the Constitution, as in the case of the Vice-President being allowed to becomea Member of the Cabinet under the second paragraph of Section 3, Article VII or the Secretary ofJustice being designated an ex-officiomember of the Judicial and Bar Council under Article VIII,Sec. 8 (1). Public respondents, on the other hand, maintain that the phrase "unless otherwiseprovided in the Constitution" in Section 13, Article VII makes reference to Section 7, par. (2), ArticleI-XB insofar as the appointive officials mentioned therein are concerned.


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The threshold question therefore is: does the prohibition in Section 13, Article VII of the 1987Constitution insofar as Cabinet members, their deputies or assistants are concerned admit of thebroad exceptions made for appointive officials in general under Section 7, par. (2), Article I-XBwhich, for easy reference is quoted anew, thus: "Unless otherwise allowed by law or by the primaryfunctions of his position, no appointive official shall hold any other office or employment in theGovernment or any subdivision, agency or instrumentality thereof, including government-owned or

controlled corporation or their subsidiaries."

We rule in the negative.

A foolproof yardstick in constitutional construction is the intention underlying the provision underconsideration. Thus, it has been held that the Court in construing a Constitution should bear in mindthe object sought to be accomplished by its adoption, and the evils, if any, sought to be prevented orremedied. A doubtful provision will be examined in the light of the history of the times, and thecondition and circumstances under which the Constitution was framed. The object is to ascertain thereason which induced the framers of the Constitution to enact the particular provision and thepurpose sought to be accomplished thereby, in order to construe the whole as to make the wordsconsonant to that reason and calculated to effect that purpose. 11

The practice of designating members of the Cabinet, their deputies and assistants as members ofthe governing bodies or boards of various government agencies and instrumentalities, includinggovernment-owned and controlled corporations, became prevalent during the time legislative powersin this country were exercised by former President Ferdinand E. Marcos pursuant to his martial lawauthority. There was a proliferation of newly-created agencies, instrumentalities and government-owned and controlled corporations created by presidential decrees and other modes of presidentialissuances where Cabinet members, their deputies or assistants were designated to head or sit asmembers of the board with the corresponding salaries, emoluments, per diems, allowances andother perquisites of office. Most of these instrumentalities have remained up to the present time.

This practice of holding multiple offices or positions in the government soon led to abuses byunscrupulous public officials who took advantage of this scheme for purposes of self-enrichment. In

fact, the holding of multiple offices in government was strongly denounced on the floor of theBatasang Pambansa. 12This condemnation came in reaction to the published report of the Commissionon Audit, entitled "1983 Summary Annual Audit Report on: Government-Owned and ControlledCorporations, Self-Governing Boards and Commissions" which carried as its Figure No. 4 a "Roaster ofMembership in Governing Boards of Government-Owned and Controlled Corporations as of December31, 1983."

Particularly odious and revolting to the people's sense of propriety and morality in governmentservice were the data contained therein that Roberto V. Ongpin was a member of the governingboards of twenty-nine (29) governmental agencies, instrumentalities and corporations; Imelda R.Marcos of twenty-three (23); Cesar E.A. Virata of twenty-two (22); Arturo R. Tanco, Jr. of fifteen (15);Jesus S. Hipolito and Geronimo Z. Velasco, of fourteen each (14); Cesar C. Zalamea of thirteen(13); Ruben B. Ancheta and Jose A. Roo of twelve (12) each; Manuel P. Alba, Gilberto O. Teodoro,and Edgardo Tordesillas of eleven (11) each; and Lilia Bautista and Teodoro Q. Pea of ten (10)each. 13

The blatant betrayal of public trust evolved into one of the serious causes of discontent with theMarcos regime. It was therefore quite inevitable and in consonance with the overwhelming sentimentof the people that the 1986 Constitutional Commission, convened as it was after the peoplesuccessfully unseated former President Marcos, should draft into its proposed Constitution theprovisions under consideration which are envisioned to remedy, if not correct, the evils that flow from


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the holding of multiple governmental offices and employment. In fact, as keenly observed by Mr.Justice Isagani A. Cruz during the deliberations in these cases, one of the strongest selling points ofthe 1987 Constitution during the campaign for its ratification was the assurance given by itsproponents that the scandalous practice of Cabinet members holding multiple positions in thegovernment and collecting unconscionably excessive compensation therefrom would bediscontinued.

But what is indeed significant is the fact that although Section 7, Article I-XB already contains ablanket prohibition against the holding of multiple offices or employment in the governmentsubsuming both elective and appointive public officials, the Constitutional Commission should see itfit to formulate another provision, Sec. 13, Article VII, specifically prohibiting the President, Vice-President, members of the Cabinet, their deputies and assistants from holding any other office oremployment during their tenure, unless otherwise provided in the Constitution itself.

Evidently, from this move as well as in the different phraseologies of the constitutional provisions inquestion, the intent of the framers of the Constitution was to impose a stricter prohibition on thePresident and his official family in so far as holding other offices or employment in the government orelsewhere is concerned.

Moreover, such intent is underscored by a comparison of Section 13, Article VII with other provisionsof the Constitution on the disqualifications of certain public officials or employees from holding otheroffices or employment. Under Section 13, Article VI, "(N)o Senator or Member of the House ofRepresentatives may hold any other office or employment in the Government. . .". Under Section5(4), Article XVI, "(N)o member of the armed forces in the active service shall, at any time, beappointed in any capacity to a civilian position in the Government,including government-owned orcontrolled corporations or any of their subsidiaries." Even Section 7 (2), Article IX-B, relied upon byrespondents provides "(U)nless otherwise allowed by law or by the primary functions of his position,no appointive official shall hold any other office or employment in the Government."

It is quite notable that in all these provisions on disqualifications to hold other office or employment,the prohibition pertains to an office or employment in the government and government-owned or

controlled corporations or their subsidiaries. In striking contrast is the wording of Section 13, ArticleVII which states that "(T)he President, Vice-President, the Members of the Cabinet, and theirdeputies or assistants shall not, unless otherwise provided in this Constitution, hold any other officeor employment during their tenure." In the latter provision, the disqualification is absolute, not beingqualified by the phrase "in the Government." The prohibition imposed on the President and hisofficial family is therefore all-embracing and covers both public and private office or employment.

Going further into Section 13, Article VII, the second sentence provides: "They shall not, during saidtenure, directly or indirectly, practice any other profession, participate in any business, or befinancially interested in any contract with, or in any franchise, or special privilege granted by theGovernment or any subdivision, agency or instrumentality thereof, including government-owned orcontrolled corporations or their subsidiaries." These sweeping, all-embracing prohibitions imposed

on the President and his official family, which prohibitions are not similarly imposed on other publicofficials or employees such as the Members of Congress, members of the civil service in generaland members of the armed forces, are proof of the intent of the 1987 Constitution to treat thePresident and his official family as a class by itself and to impose upon said class stricterprohibitions.

Such intent of the 1986 Constitutional Commission to be stricter with the President and his officialfamily was also succinctly articulated by Commissioner Vicente Foz after Commissioner RegaladoMaambong noted during the floor deliberations and debate that there was no symmetry between the


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Civil Service prohibitions, originally found in the General Provisions and the anticipated report on theExecutive Department. Commissioner Foz Commented, "We actually have to be stricter with thePresident and the members of the Cabinet because they exercise more powers and, therefore, morecheeks and restraints on them are called for because there is more possibility of abuse in theircase." 14

Thus, while all other appointive officials in the civil service are allowed to hold other office oremployment in the government during their tenure when such is allowed by law or by the primaryfunctions of their positions, members of the Cabinet, their deputies and assistants may do so onlywhen expressly authorized by the Constitution itself. In other words, Section 7, Article I-XB is meantto lay down the general rule applicable to all elective and appointive public officials and employees,while Section 13, Article VII is meant to be the exception applicable only to the President, the Vice-President, Members of the Cabinet, their deputies and assistants.

This being the case, the qualifying phrase "unless otherwise provided in this Constitution" in Section13, Article VII cannot possibly refer to the broad exceptions provided under Section 7, Article I-XB ofthe 1987 Constitution. To construe said qualifying phrase as respondents would have us do, wouldrender nugatory and meaningless the manifest intent and purpose of the framers of the Constitutionto impose a stricter prohibition on the President, Vice-President, Members of the Cabinet, theirdeputies and assistants with respect to holding other offices or employment in the governmentduring their tenure. Respondents' interpretation that Section 13 of Article VII admits of the exceptionsfound in Section 7, par. (2) of Article IX-B would obliterate the distinction so carefully set by theframers of the Constitution as to when the high-ranking officials of the Executive Branch from thePresident to Assistant Secretary, on the one hand, and the generality of civil servants from the rankimmediately below Assistant Secretary downwards, on the other, may hold any other office orposition in the government during their tenure.

Moreover, respondents' reading of the provisions in question would render certain parts of theConstitution inoperative. This observation applies particularly to the Vice-President who, underSection 13 of Article VII is allowed to hold other office or employment when so authorized by theConstitution, but who as an elective public official under Sec. 7, par. (1) of Article I-XB is absolutely

ineligible "for appointment or designation in any capacity to any public office or position during histenure." Surely, to say that the phrase "unless otherwise provided in this Constitution" found inSection 13, Article VII has reference to Section 7, par. (1) of Article I-XB would render meaninglessthe specific provisions of the Constitution authorizing the Vice-President to become a member of theCabinet,15and to act as President without relinquishing the Vice-Presidency where the President shallnot nave been chosen or fails to qualify. 16Such absurd consequence can be avoided only by interpretingthe two provisions under consideration as one, i.e., Section 7, par. (1) of Article I-XB providing the generalrule and the other, i.e., Section 13, Article VII as constituting the exception thereto. In the same mannermust Section 7, par. (2) of Article I-XB be construed vis-a-visSection 13, Article VII.

It is a well-established rule in Constitutional construction that no one provision of the Constitution isto be separated from all the others, to be considered alone, but that all the provisions bearing upon aparticular subject are to be brought into view and to be so interpreted as to effectuate the great

purposes of the instrument. 17Sections bearing on a particular subject should be considered andinterpreted together as to effectuate the whole purpose of the Constitution18and one section is not to beallowed to defeat another, if by any reasonable construction, the two can be made to stand together. 19

In other words, the court must harmonize them, if practicable, and must lean in favor of aconstruction which will render every word operative, rather than one which may make the words idleand nugatory. 20


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Since the evident purpose of the framers of the 1987 Constitution is to impose a stricter prohibitionon the President, Vice-President, members of the Cabinet, their deputies and assistants with respectto holding multiple offices or employment in the government during their tenure, the exception to thisprohibition must be read with equal severity. On its face, the language of Section 13, Article VII isprohibitory so that it must be understood as intended to be a positive and unequivocal negation ofthe privilege of holding multiple government offices or employment. Verily, wherever the language

used in the constitution is prohibitory, it is to be understood as intended to be a positive andunequivocal negation. 21The phrase "unless otherwise provided in this Constitution" must be given aliteral interpretation to refer only to those particular instances cited in the Constitution itself, to wit: theVice-President being appointed as a member of the Cabinet under Section 3, par. (2), Article VII; oracting as President in those instances provided under Section 7, pars. (2) and (3), Article VII; and, theSecretary of Justice being ex-officiomember of the Judicial and Bar Council by virtue of Section 8 (1),Article VIII.

The prohibition against holding dual or multiple offices or employment under Section 13, Article VII ofthe Constitution must not, however, be construed as applying to posts occupied by the Executiveofficials specified therein without additional compensation in an ex-officiocapacity as provided bylaw and as required22by the primary functions of said officials' office. The reason is that these posts dono comprise "any other office" within the contemplation of the constitutional prohibition but are properly an

imposition of additional duties and functions on said officials. 23To characterize these posts otherwisewould lead to absurd consequences, among which are: The President of the Philippines cannot chair theNational Security Council reorganized under Executive Order No. 115 (December 24, 1986). Neither canthe Vice-President, the Executive Secretary, and the Secretaries of National Defense, Justice, Labor andEmployment and Local Government sit in this Council, which would then have no reason to exist for lackof a chairperson and members. The respective undersecretaries and assistant secretaries, would also beprohibited.

The Secretary of Labor and Employment cannot chair the Board of Trustees of the NationalManpower and Youth Council (NMYC) or the Philippine Overseas Employment Administration(POEA), both of which are attached to his department for policy coordination and guidance. Neithercan his Undersecretaries and Assistant Secretaries chair these agencies.

The Secretaries of Finance and Budget cannot sit in the MonetaryBoard. 24Neither can their respective undersecretaries and assistant secretaries. The Central BankGovernor would then be assisted by lower ranking employees in providing policy direction in the areas ofmoney, banking and credit.25

Indeed, the framers of our Constitution could not have intended such absurd consequences. AConstitution, viewed as a continuously operative charter of government, is not to be interpreted asdemanding the impossible or the impracticable; and unreasonable or absurd consequences, ifpossible, should be avoided. 26

To reiterate, the prohibition under Section 13, Article VII is not to be interpreted as covering positionsheld without additional compensation in ex-officiocapacities as provided by law and as required by

the primary functions of the concerned official's office. The term ex-officiomeans "from office; byvirtue of office." It refers to an "authority derived from official character merely, not expresslyconferred upon the individual character, but rather annexed to the official position." Ex-officiolikewise denotes an "act done in an official character, or as a consequence of office, andwithout any other appointment or authority than that conferred by the office." 27An ex-officiomemberof a board is one who is a member by virtue of his title to a certain office, and without further warrant orappointment. 28To illustrate, by express provision of law, the Secretary of Transportation andCommunications is the ex-officioChairman of the Board of the Philippine Ports Authority, 29and the LightRail Transit Authority. 30


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The Court had occasion to explain the meaning of an ex-officioposition in Rafael vs.Embroideryand Apparel Control and Inspection Board,31thus: "An examination of section 2 of the questionedstatute (R.A. 3137) reveals that for the chairman and members of the Board to qualify they need only bedesignated by the respective department heads. With the exception of the representative from the privatesector, they sit ex-officio. In order to be designated they must already be holding positions in the officesmentioned in the law. Thus, for instance, one who does not hold a previous appointment in the Bureau of

Customs, cannot, under the act, be designated a representative from that office. The same is true withrespect to the representatives from the other offices. No new appointments are necessary. This is as itshould be, because the representatives so designated merely perform duties in the Board in addition tothose already performed under their original appointments." 32

The term "primary" used to describe "functions" refers to the order of importance and thus meanschief or principal function. The term is not restricted to the singular but may refer to the plural. 33Theadditional duties must not only be closely related to, but must be required by the official's primaryfunctions. Examples of designations to positions by virtue of one's primary functions are the Secretariesof Finance and Budget sitting as members of the Monetary Board, and the Secretary of Transportationand Communications acting as Chairman of the Maritime Industry Authority 34and the Civil AeronauticsBoard.

If the functions required to be performed are merely incidental, remotely related, inconsistent,incompatible, or otherwise alien to the primary function of a cabinet official, such additional functionswould fall under the purview of "any other office" prohibited by the Constitution. An example wouldbe the Press Undersecretary sitting as a member of the Board of the Philippine Amusement andGaming Corporation. The same rule applies to such positions which confer on the cabinet officialmanagement functions and/or monetary compensation, such as but not limited to chairmanships ordirectorships in government-owned or controlled corporations and their subsidiaries.

Mandating additional duties and functions to the President, Vice-President, Cabinet Members, theirdeputies or assistants which are not inconsistent with those already prescribed by their offices orappointments by virtue of their special knowledge, expertise and skill in their respective executiveoffices is a practice long-recognized in many jurisdictions. It is a practice justified by the demands ofefficiency, policy direction, continuity and coordination among the different offices in the ExecutiveBranch in the discharge of its multifarious tasks of executing and implementing laws affectingnational interest and general welfare and delivering basic services to the people. It is consistent withthe power vested on the President and his alter egos, the Cabinet members, to have control of allthe executive departments, bureaus and offices and to ensure that the laws are faithfullyexecuted. 35Without these additional duties and functions being assigned to the President and his officialfamily to sit in the governing bodies or boards of governmental agencies or instrumentalities in anex-officiocapacity as provided by law and as required by their primary functions, they would be supervision,thereby deprived of the means for control and resulting in an unwieldy and confused bureaucracy.

It bears repeating though that in order that such additional duties or functions may not transgress theprohibition embodied in Section 13, Article VII of the 1987 Constitution, such additional duties orfunctions must be required by the primary functions of the official concerned, who is to perform the

same in an ex-officio capacity as provided by law, without receiving any additional compensationtherefor.

The ex-officioposition being actually and in legal contemplation part of the principal office, it followsthat the official concerned has no right to receive additional compensation for his services in the saidposition. The reason is that these services are already paid for and covered by the compensationattached to his principal office. It should be obvious that if, say, the Secretary of Finance attends ameeting of the Monetary Board as an ex-officiomember thereof, he is actually and in legalcontemplation performing the primary function of his principal office in defining policy in monetary


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and banking matters, which come under the jurisdiction of his department. For such attendance,therefore, he is not entitled to collect any extra compensation, whether it be in the form of a per themor an honorarium or an allowance, or some other such euphemism. By whatever name it isdesignated, such additional compensation is prohibited by the Constitution.

It is interesting to note that during the floor deliberations on the proposal of Commissioner Christian

Monsod to add to Section 7, par. (2), Article IX-B, originally found as Section 3 of the GeneralProvisions, the exception "unless required by the functions of his position," 36express reference tocertain high-ranking appointive public officials like members of the Cabinet were made. 37Responding toa query of Commissioner Blas Ople, Commissioner Monsod pointed out that there are instances whenalthough not required by current law, membership of certain high-ranking executive officials in otheroffices and corporationsis necessary by reason of said officials' primary functions. The example given byCommissioner Monsod was the Minister of Trade and Industry. 38

While this exchange between Commissioners Monsod and Ople may be used as authority for sayingthat additional functions and duties flowing from the primary functions of the official may be imposedupon him without offending the constitutional prohibition under consideration, it cannot, however, betaken as authority for saying that this exception is by virtue of Section 7, par. (2) of Article I-XB. Thiscolloquy between the two Commissioners took place in the plenary session of September 27, 1986.

Under consideration then was Section 3 of Committee Resolution No. 531 which was the proposedarticle on General Provisions. 39At that time, the article on the Civil Service Commission had beenapproved on third reading on July 22, 1986, 40while the article on the Executive Department, containingthe more specific prohibition in Section 13, had also been earlier approved on third reading on August 26,1986. 41It was only after the draft Constitution had undergone reformatting and "styling" by the Committeeon Style that said Section 3 of the General Provisions became Section 7, par. (2) of Article IX-B andreworded "Unless otherwise allowed by law or by the primary functions of his position. . . ."

What was clearly being discussed then were general principles which would serve as constitutionalguidelines in the absence of specific constitutional provisions on the matter. What was primarily atissue and approved on that occasion was the adoption of the qualified and delimited phrase "primaryfunctions" as the basis of an exception to the general rule covering all appointive public officials. Hadthe Constitutional Commission intended to dilute the specific prohibition in said Section 13 of ArticleVII, it could have re-worded said Section 13 to conform to the wider exceptions provided in thenSection 3 of the proposed general Provisions, later placed as Section 7, par. (2) of Article IX-B onthe Civil Service Commission.

That this exception would in the final analysis apply also to the President and his official family is byreason of the legal principles governing additional functions and duties of public officials rather thanby virtue of Section 7, par. 2, Article IX-B At any rate, we have made it clear that only the additionalfunctions and duties "required," as opposed to "allowed," by the primary functions may beconsidered as not constituting "any other office."

While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutionalconvention in order to arrive at the reason and purpose of the resulting Constitution, resort thereto

may be had only when other guides fail 42as said proceedings are powerless to vary the terms of theConstitution when the meaning is clear. Debates in the constitutional convention "are of value as showingthe views of the individual members, and as indicating the reasons for their votes, but they give us nolight as to the views of the large majority who did not talk, much less of the mass of our fellow citizenswhose votes at the polls gave that instrument the force of fundamental law. We think it safer to construethe constitution from what appears upon its face." 43The proper interpretation therefore depends more onhow it was understood by the people adopting it than in the framers's understanding thereof. 44


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It being clear, as it was in fact one of its best selling points, that the 1987 Constitution seeks toprohibit the President, Vice-President, members of the Cabinet, their deputies or assistants fromholding during their tenure multiple offices or employment in the government, except in those casesspecified in the Constitution itself and as above clarified with respect to posts held without additionalcompensation in an ex-officio capacity as provided by law and as required by the primary functionsof their office, the citation of Cabinet members (then called Ministers) as examples during the debate

and deliberation on the general rule laid down for all appointive officials should be considered asmere personal opinions which cannot override the constitution's manifest intent and the people'understanding thereof.

In the light of the construction given to Section 13, Article VII in relation to Section 7, par. (2), ArticleIX-B of the 1987 Constitution, Executive Order No. 284 dated July 23, 1987 is unconstitutional.Ostensibly restricting the number of positions that Cabinet members, undersecretaries or assistantsecretaries may hold in addition to their primary position to not more than two (2) positions in thegovernment and government corporations, Executive Order No. 284 actually allows them to holdmultiple offices or employment in direct contravention of the express mandate of Section 13, ArticleVII of the 1987 Constitution prohibiting them from doing so, unless otherwise provided in the 1987Constitution itself.

The Court is alerted by respondents to the impractical consequences that will result from a strictapplication of the prohibition mandated under Section 13, Article VII on the operations of theGovernment, considering that Cabinet members would be stripped of their offices held in anex-officiocapacity, by reason of their primary positions or by virtue of legislation. As earlier clarified inthis decision, ex-officioposts held by the executive official concerned without additionalcompensation as provided by law and as required by the primary functions of his office do not fallunder the definition of "any other office" within the contemplation of the constitutional prohibition.With respect to other offices or employment held by virtue of legislation, including chairmanships ordirectorships in government-owned or controlled corporations and their subsidiaries, suffice it to saythat the feared impractical consequences are more apparent than real. Being head of an executivedepartment is no mean job. It is more than a full-time job, requiring full attention, specializedknowledge, skills and expertise. If maximum benefits are to be derived from a department head's

ability and expertise, he should be allowed to attend to his duties and responsibilities without thedistraction of other governmental offices or employment. He should be precluded from dissipatinghis efforts, attention and energy among too many positions of responsibility, which may result inhaphazardness and inefficiency. Surely the advantages to be derived from this concentration ofattention, knowledge and expertise, particularly at this stage of our national and economicdevelopment, far outweigh the benefits, if any, that may be gained from a department headspreading himself too thin and taking in more than what he can handle.

Finding Executive Order No. 284 to be constitutionally infirm, the court hereby orders respondentsSecretary of Environment and Natural Resources Fulgencio Factoran, Jr., Secretary of LocalGovernment 45Luis Santos, Secretary of National Defense Fidel V. Ramos, Secretary of Health AlfredoR.A. Bengzon and Secretary of the Budget Guillermo Carague to immediately relinquish their otheroffices or employment, as herein defined, in the government, including government-owned or controlled

corporations and their subsidiaries. With respect to the other named respondents, the petitions havebecome moot and academic as they are no longer occupying the positions complained of.

During their tenure in the questioned positions, respondents may be considered de factoofficers andas such entitled to emoluments for actual services rendered. 46It has been held that "in cases wherethere is no de jure,officer, ade factoofficer, who, in good faith has had possession of the office and hasdischarged the duties pertaining thereto, is legally entitled to the emoluments of the office, and may in anappropriate action recover the salary, fees and other compensations attached to the office. This doctrineis, undoubtedly, supported on equitable grounds since it seems unjust that the public should benefit by


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the services of an officer de facto and then be freed from all liability to pay any one for suchservices. 47Any per diem, allowances or other emoluments received by the respondents by virtue ofactual services rendered in the questioned positions may therefore be retained by them.

WHEREFORE, subject to the qualification above-stated, the petitions are GRANTED. ExecutiveOrder No. 284 is hereby declared null and void and is accordingly set aside.

SO ORDERED.


Manila

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 CORPORATECOUNSEL, respondents.

BELLOSILLO, J .:

The FiIipino First Policyenshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, andconcessions covering the national economy and patrimony, the State shall give preference toqualified Filipinos,1is in oked 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 theprovision 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 theprotective mantle of the Constitution.

The controversy arose when respondent Government Service Insurance System (GSIS), pursuant tothe 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 outstandingshares of respondent MHC. The winning bidder, or the eventual "strategic partner," is to providemanagement expertise and/or an international marketing/reservation system, and financial supportto strengthen the profitability and performance of the Manila Hotel.2In a close bidding held on 18September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipinocorporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, andRenong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same numberof shares at P44.00 per share, or P2.42 more than the bid of petitioner.


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Pertinent provisions of the bidding rules prepared by respondent GSIS state

I. EXECUTION OF THE NECESSARY CONTRACTS WITHGSIS/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 topurchase the Block of Shares and GSIS will instead offer the Block of Shares to theother Qualified Bidders:

a. The Highest Bidder must negotiate and execute with theGSIS/MHC the Management Contract, InternationalMarketing/Reservation System Contract or other type of contractspecified by the Highest Bidder in its strategic plan for the ManilaHotel. . . .

b. The Highest Bidder must execute the Stock Purchase and SaleAgreement with GSIS . . . .

K. DECLARATION OF THE WINNING BIDDER/STRATEGICPARTNER

The Highest Bidder will be declared the Winning Bidder/Strategic Partner after thefollowing conditions are met:

a. Execution of the necessary contracts with GSIS/MHC not later thanOctober 23, 1995 (reset to November 3, 1995); and

b. Requisite approvals from the GSIS/MHC and COP (Committee onPrivatization)/OGCC (Office of the Government Corporate Counsel)

are obtained.3

Pending the declaration of Renong Berhad as the winning bidder/strategic partner and the executionof the necessary contracts, petitioner in a letter to respondent GSIS dated 28 September 1995matched the bid price of P44.00 per share tendered by Renong Berhad. 4In a subsequent letter dated10 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. ..5which respondent GSIS refused to accept.

On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of thematching bid and that the sale of 51% of the MHC may be hastened by respondent GSIS andconsummated with Renong Berhad, petitioner came to this Court on prohibition and mandamus. On18 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 Bancafter it was referred toit by the First Division. The case was then set for oral arguments with former Chief Justice EnriqueM. 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 submitsthat the Manila Hotel has been identified with the Filipino nation and has practically become a


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historical monument which reflects the vibrancy of Philippine heritage and culture.It is a proudlegacy of an earlier generation of Filipinos who believed in the nobility and sacredness ofindependence and its power and capacity to release the full potential of the Filipino people .To allintents and purposes, it has become a part of the national patrimony.6Petitioner also argues thatsince 51% of the shares of the MHC carries with it the ownership of the business of the hotel which isowned 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 theterm 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 itsbusiness also unquestionably part of the national economy petitioner should be preferred after it hasmatched the bid offer of the Malaysian firm. For the bidding rules mandate that if for any reason, theHighest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other QualifiedBidders that have validly submitted bids provided that these Qualified Bidders are willing to matchthe highest bid in terms of price per share.8

Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987Constitution is merely a statement of principle and policy since it is not a self-executing provision and

requires implementing legislation(s) . . . Thus, for the said provision to Operate, there must beexisting 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 termnational patrimony which only refers to lands of the public domain, waters, minerals, coal, petroleumand other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora andfauna and all marine wealth in its territorial sea, and exclusive marine zone as cited in the first andsecond paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to respondents, while petitionerspeaks of the guests who have slept in the hotel and the events that have transpired therein whichmake 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 GSISwhich possesses a personality of its own separate and distinct from the Philippines as a State.

Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional provisioninvoked is still inapplicable since what is being sold is only 51% of the outstanding shares of thecorporation, not the hotel building nor the land upon which the building stands. Certainly, 51% of theequity of the MHC cannot be considered part of the national patrimony. Moreover, if the dispositionof the shares of the MHC is really contrary to the Constitution, petitioner should have questioned itright 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 iffor any reason, the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this tothe other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders arewilling to match the highest bid in terms of price per share, is misplaced. Respondents postulate thatthe privilege of submitting a matching bid has not yet arisen since it only takes place if for anyreason, the Highest Bidder cannot be awarded the Block of Shares . Thus the submission bypetitioner of a matching bid is premature since Renong Berhad could still very well be awarded theblock of shares and the condition giving rise to the exercise of the privilege to submit a matching bidhad not yet taken place.

Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since respondentGSIS did not exercise its discretion in a capricious, whimsical manner, and if ever it did abuse itsdiscretion it was not so patent and gross as to amount to an evasion of a positive duty or a virtual


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refusal to perform a duty enjoined by law. Similarly, the petition for mandamusshould fail aspetitioner has no clear legal right to what it demands and respondents do not have an imperativeduty to perform the act required of them by petitioner.

We now resolve. A constitution is a system of fundamental laws for the governance andadministration of a nation. It is supreme, imperious, absolute and unalterable except by the authority

from which it emanates. It has been defined as thefundamental and paramount law of thenation. 10It prescribes the permanent framework of a system of government, assigns to the differentdepartments their respective powers and duties, and establishes certain fixed principles on whichgovernment is founded. The fundamental conception in other words is that it is a supreme law to which allother laws must conform and in accordance with which all private rights must be determined and all publicauthority administered.11Under the doctrine of constitutional supremacy, if a law or contract violates anynorm of the constitution that law or contract whether promulgated by the legislative or by the executivebranch or entered into by private persons for private purposes is null and void and without any force andeffect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it isdeemed written in every statute and contract.

Admittedly, some constitutions are merely declarations of policies and principles. Their provisionscommand 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 governmentalmachinery and securing certain fundamental and inalienable rights of citizens. 12A provision whichlays down a general principle, such as those found in Art. II of the 1987 Constitution, is usually not self-executing. But a provision which is complete in itself and becomes operative without the aid ofsupplementary or enabling legislation, or that which supplies sufficient rule by means of which the right itgrants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing ifthe nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, sothat they can be determined by an examination and construction of its terms, and there is no languageindicating that the subject is referred to the legislature for action. 13

As against constitutions of the past, modern constitutions have been generally drafted upon adifferent principle and have often become in effect extensive codes of laws intended to operatedirectly 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 itis expressly provided that a legislative act is necessary to enforce a constitutional mandate, thepresumption now is that all provisions of the constitution are self-executing If the constitutionalprovisions are treated as requiring legislation instead of self-executing, the legislature would havethe power to ignore and practically nullify the mandate of the fundamental law.14This can becataclysmic. 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 thannon-self-executing . . . . Unless the contrary is clearly intended, the provisions of theConstitution should be considered self-executing, as a contrary rule would give thelegislature discretion to determine when, or whether, they shall be effective. Theseprovisions would be subordinated to the will of the lawmaking body, which could

make them entirely meaningless by simply refusing to pass the needed implementingstatute. 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 theChairman of the Committee on Style. If the wording of"PREFERENCE" is given to QUALIFIED FILIPINOS," can it be


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understood as a preference to qualified Filipinos vis-a-vis Filipinoswho are not qualified. So, why do we not make it clear? To qualifiedFilipinos as against aliens?

THE PRESIDENT. What is the question of Commissioner Rodrigo? Isit to remove the word "QUALIFIED?".

MR. RODRIGO. No, no, but say definitely "TO QUALIFIEDFILIPINOS" as against whom? As against aliens or over aliens?

MR. NOLLEDO. Madam President, I think that is understood. We usethe word "QUALIFIED" because the existing laws or prospective lawswill always lay down conditions under which business may bedone.For example, qualifications on the setting up of other financialstructures, et cetera(emphasis 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 appearthat it is non-self-executing but simply for purposes of style. But, certainly, the legislature is notprecluded from enacting other further laws to enforce the constitutional provision so long as thecontemplated statute squares with the Constitution. Minor details may be left to the legislaturewithout impairing the self-executing nature of constitutional provisions.

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate theexercise 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 ofthe 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 theviolation of a self-executing constitutional provision does not render such a provision ineffective inthe absence of such legislation. The omission from a constitution of any express provision for aremedy for enforcing a right or liability is not necessarily an indication that it was not intended to beself-executing. The rule is that a self-executing provision of the constitution does not necessarilyexhaust legislative power on the subject, but any legislation must be in harmony with theconstitution, further the exercise of constitutional right and make it more available. 17Subsequentlegislation 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 isimplied from the tenor of the first and third paragraphs of the same section which undoubtedly arenot self-executing. 18The 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 fullyowned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and exerciseauthority 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 requireany legislation in order to give preference to qualified Filipinos in the grant of rights, privileges andconcessions covering the national economy and patrimony. A constitutional provision may be self-executing in one part and non-self-executing in another. 19


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Even the cases cited by respondents holding that certain constitutional provisions are merelystatements of principles and policies, which are basically not self-executing and only placed in theConstitution as moral incentives to legislation, not as judicially enforceable rights are simply not inpoint. Basco v. Philippine Amusements and Gaming Corporation20speaks of constitutional provisionson personal dignity, 21the sanctity of family life, 22the vital role of the youth in nation-building 23thepromotion of social justice, 24and the values of education. 25Tolentino v. Secretary of Finance 26refers to

the constitutional provisions on social justice and human rights

27

and on education.

28

Lastly,Kilosbayan,Inc.v. Morato 29cites provisions on the promotion of general welfare, 30the sanctity of family life, 31thevital role of the youth in nation-building 32and the promotion of total human liberation anddevelopment. 33A reading of these provisions indeed clearly shows that they are not judicially enforceableconstitutional rights but merely guidelines for legislation. The very terms of the provisions manifest thatthey are only principles upon which the legislations must be based.Res ipsa loquitur.

On the other hand, Sec. 10, second par., Art. XII of the of the 1987 Constitution is a mandatory,positive command which is complete in itself and which needs no further guidelines or implementinglaws or rules for its enforcement. From its very words the provision does not require any legislationto put it in operation. It isper sejudicially enforceable When our Constitution mandates that [i]n thegrant of rights, privileges, and concessions covering national economy and patrimony, the Stateshall 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 actionmay be maintained to enforce such right notwithstanding the absence of any legislation on thesubject; 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 legislationsmust 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 34explains

The patrimony of the Nation that should be conserved and developed refers not onlyto out rich natural resources but also to the cultural heritage of out race. It also refersto our intelligence in arts, sciences and letters. Therefore, we should develop notonly 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. 35When theConstitution speaks of national patrimony, it refers not only to the natural resources of the Philippines, asthe Constitution could have very well used the term natural resources, but also to the cultural heritageofthe Filipinos.

Manila Hotel has become a landmark a living testimonial of Philippine heritage. While it wasrestrictively an American hotel when it first opened in 1912, it immediately evolved to be trulyFilipino, Formerly a concourse for the elite, it has since then become the venue of various significantevents which have shaped Philippine history. It was called the Cultural Center of the 1930's. It wasthe site of the festivities during the inauguration of the Philippine Commonwealth. Dubbed asthe 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 ofa City. 37During World War II the hotel was converted by the Japanese Military Administration into amilitary headquarters. When the American forces returned to recapture Manila the hotel was selected bythe Japanese together with Intramuros as the two (2) places fro their final stand. Thereafter, in the 1950'sand 1960's, the hotel became the center of political activities, playing host to almost every politicalconvention. In 1970 the hotel reopened after a renovation and reaped numerous internationalrecognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the site of a


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failed coup d' etatwhere an aspirant for vice-president was "proclaimed" President of the PhilippineRepublic.

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 ownhistoricity 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 theMHC comes within the purview of the constitutional shelter for it comprises the majority andcontrolling stock, so that anyone who acquires or owns the 51% will have actual control andmanagement of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hoteland the land on which the hotel edifice stands. Consequently, we cannot sustain respondents' claimthat theFilipino First Policyprovision is not applicable since what is being sold is only 51%ofthe outstanding shares of the corporation, not the Hotel building nor the land upon which the buildingstands. 38

The argument is pure sophistry. The term qualified Filipinosas used in Our Constitution alsoincludes corporations at least 60% of which is owned by Filipinos. This is very clear from theproceedings of the 1986 Constitutional Commission

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. I would like to introduce an amendment to the Nolledoamendment. And the amendment would consist in substituting thewords "QUALIFIED FILIPINOS" with the following: "CITIZENS OFTHE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONSWHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLYOWNED BY SUCH CITIZENS.

xxx xxx xxx

MR. MONSOD. Madam President, apparently the proponent isagreeable, but we have to raise a question. Suppose it is acorporation that is 80-percent Filipino, do we not give it preference?

MR. DAVIDE. The Nolledo amendment would refer to an individualFilipino. 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 wesay that the preference should only be 100-percent Filipino.

MR: DAVIDE. I want to get that meaning clear because "QUALIFIEDFILIPINOS" may refer only to individuals and not to juridicalpersonalities or entities.

MR. MONSOD. We agree, Madam President. 39

xxx xxx xxx


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MR. RODRIGO. Before we vote, may I request that the amendmentbe read again.

MR. NOLLEDO. The amendment will read: "IN THE GRANT OFRIGHTS, PRIVILEGES AND CONCESSIONS COVERING THENATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL

GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word"Filipinos" here, as intended by the proponents, will include not onlyindividual 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 CommissionerNolledo to please restate his amendment so that I can ask aquestion.

MR. NOLLEDO. "IN THE GRANT OF RIGHTS, PRIVILEGES AND

CONCESSIONS COVERING THE NATIONAL ECONOMY ANDPATRIMONY, THE STATE SHALL GIVE PREFERENCE TOQUALIFIED FILIPINOS."

MR FOZ. In connection with that amendment, if a foreign enterprise isqualified and a Filipino enterprise is also qualified, will the Filipinoenterprise still be given a preference?

MR. NOLLEDO. Obviously.

MR. FOZ. If the foreigner is more qualified in some aspects than theFilipino enterprise, will the Filipino still be preferred?

MR. NOLLEDO. The answer is "yes."

MR. FOZ. Thank you, 41

Expounding further on the Filipino First Policyprovision Commissioner Nolledo continues

MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it will be "SHALL THE STATE SHALL GlVE PREFERENCE TO QUALIFIED FILIPINOS. Thisembodies the so-called "Filipino First" policy. That means that Filipinos should begiven preference in the grant of concessions, privileges and rights covering thenational patrimony. 42

The exchange of views in the sessions of the Constitutional Commission regarding the subjectprovision was still further clarified by Commissioner Nolledo 43

Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all economicconcerns. It is better known as the FILIPINO FIRST Policy . . . This provision wasnever found in previous Constitutions . . . .


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The term "qualified Filipinos" simply means that preference shall be given to thosecitizens who can make a viable contribution to the common good, because ofcredible competence and efficiency. It certainly does NOT mandate the pamperingand preferential treatment to Filipino citizens or organizations that are incompetent orinefficient, since such an indiscriminate preference would be counter productive andinimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has tobe made between a "qualified foreigner" end a "qualified Filipino," the latter shall bechosen over the former."

Lastly, the wordqualifiedis also determinable. Petitioner was so considered by respondent GSISand selected as one of thequalifiedbidders. It was pre-qualified by respondent GSIS in accordancewith its own guidelines so that the sole inference here is that petitioner has been found to bepossessed of proven management expertise in the hotel industry, or it has significant equityownership in another hotel company, or it has an overall management and marketing proficiency tosuccessfully operate the Manila Hotel. 44

The penchant to try to whittle away the mandate of the Constitution by arguing that the subjectprovision is not self-executory and requires implementing legislation is quite disturbing. The attemptto violate a clear constitutional provision by the government itself is only too distressing. Toadopt 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 thegovernment a defense that arises out of the failure to enact further enabling, implementing or guidinglegislation. 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 theConstitution, even before Congress acts provided that there are discoverable legalstandards for executive action. When the executive acts, it must be guided by its own

understanding of the constitutional command and of applicable laws. Theresponsibility for reading and understanding the Constitution and the laws is not thesole 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 aconstitutional command. That is not how constitutional government operates. 45

Respondents further argue that the constitutional provision is addressed to the State, not torespondent GSIS which by itself possesses a separate and distinct personality. This argument againis at best specious. It is undisputed that the sale of 51% of the MHC could only be carried out withthe prior approval of the State acting through respondent Committee on Privatization. As correctlypointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets ofrespondents 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 theactivity it engages in is a "public function;"(2) when the government is so significantly involved withthe private actor as to make the government responsible for his action; and, (3) when thegovernment has approved or authorized the action. It is evident that the act of respondent GSIS inselling 51% of its share in respondent MHC comes under the second and third categories of "stateaction." Without doubt therefore the transaction. although entered into by respondent GSIS, is in facta transaction of the State and therefore subject to the constitutional command. 46


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When the Constitution addresses the State it refers not only to the people but also to thegovernment as elements of the State. After all, government is composed of three (3) divisions ofpower legislative, executive and judicial. Accordingly, a constitutional mandate directed to theState is correspondingly directed to the three(3) branches of government. It is undeniable that in thiscase the subject constitutional injunction is addressed among others to the Executive Departmentand 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 winningbidder. The bidding rules expressly provide that the highest bidder shall only be declared the winningbidder after it has negotiated and executed the necessary contracts, and secured the requisiteapprovals. Since the "Filipino First Policyprovision of the Constitution bestows preference onqualified Filipinos the mere tending of the highest bid is not an assurance that the highest bidder willbe declared the winning bidder. Resultantly, respondents are not bound to make the award yet, norare they under obligation to enter into one with the highest bidder. For in choosing the awardeerespondents are mandated to abide by the dictates of the 1987 Constitution the provisions of whichare 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 itshould be, impliedly written in the bidding rules issued by respondent GSIS, lest the bidding rules benullified for being violative of the Constitution. It is a basic principle in constitutional law that all lawsand contracts must conform with the fundamental law of the land. Those which violate theConstitution lose their reason for being.

Paragraph V. J. 1 of the bidding rules provides that [if] for any reasonthe Highest Bidder cannot beawarded the Block of Shares, GSIS may offer this to other Qualified Bidders that have validlysubmitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of

price pershare. 47Certainly, the constitutional mandate itself is reason enoughnot to award the block of sharesimmediately to the foreign bidder notwithstanding its submission of a higher, or even the highest, bid. Infact, 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 thegrant of rights, privileges and concessions covering the national economy and patrimony, therebyexceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to matchthe bid of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should goto the Filipino. It must be so if we are to give life and meaning to the Filipino First Policyprovision ofthe 1987 Constitution. For, while this may neither be expressly stated nor contemplated in thebidding rules, the constitutional fiat is, omnipresent to be simply disregarded. To ignore it would be tosanction a perilous skirting of the basic law.

This Court does not discount the apprehension that this policy may discourage foreign investors. Butthe 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 itsagencies or instrumentalities is presumed to know his rights and obligations under the Constitutionand the laws of the forum.

The argument of respondents that petitioner is now estopped from questioning the sale to RenongBerhad since petitioner was well aware from the beginning that a foreigner could participate in thebidding is meritless. Undoubtedly, Filipinos and foreigners alike were invited to the bidding. Butforeigners may be awarded the sale only if no Filipino qualifies, or if the qualified Filipino fails tomatch the highest bid tendered by the foreign entity. In the case before us, while petitioner was


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already preferred at the inception of the bidding because of the constitutional mandate, petitionerhad not yet matched the bid offered by Renong Berhad. Thus it did not have the right or personalitythen to compel respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid ofthe foreign firm and the apparent disregard by respondent GSIS of petitioner's matching bid did thelatter have a cause of action.

Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the awardhas been finally made. To insist on selling the Manila Hotel to foreigners when there is a Filipinogroup willing to match the bid of the foreign group is to insist that government be treated as anyother ordinary market player, and bound by its mistakes or gross errors of judgment, regardless ofthe consequences to the Filipino people. The miscomprehension of the Constitution is regrettable.Thus we would rather remedy the indiscretion while there is still an opportunity to do so than let thegovernment develop the habit of forgetting that the Constitution lays down the basic conditions andparameters for its actions.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to thebidding rules, respondent GSIS is left with no alternative but to award to petitioner the block ofshares of MHC and to execute the necessary agreements and documents to effect the sale inaccordance 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 providedin the bidding rules after the latter has matched the bid of the Malaysian firm clearly constitutesgrave abuse of discretion.

The Filipino First Policyis a product of Philippine nationalism. It is embodied in the 1987 Constitutionnot merely to be used as a guideline for future legislation but primarily to be enforced; so must it beenforced. This Court as the ultimate guardian of the Constitution will never shun, under anyreasonable circumstance, the duty of upholding the majesty of the Constitution which it is tasked todefend. It is worth emphasizing that it is not the intention of this Court to impede and diminish, muchless undermine, the influx of foreign investments. Far from it, the Court encourages and welcomesmore business opportunities but avowedly sanctions the preference for Filipinos whenever suchpreference 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 itsjudgment for that of the legislature or the executive about the wisdom and feasibilityof legislation economic in nature, the Supreme Court has not been spared criticismfor decisions perceived as obstacles to economic progress and development . . . inconnection with a temporary injunction issued by the Court's First Division againstthe sale of the Manila Hotel to a Malaysian Firm and its partner, certain statementswere published in a major daily to the effect that injunction "again demonstrates thatthe 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 whetherthey are viable or attainable, it is its bounden duty to make sure that they do notviolate the Constitution or the laws, or are not adopted or implemented with graveabuse of discretion amounting to lack or excess of jurisdiction. It will never shirk thatduty, 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 preventingfurther 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


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expense of national pride and dignity. For the Constitution enshrines higher and nobler non-materialvalues. Indeed, the Court will always defer to the Constitution in the proper governance of a freesociety; 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 authorityemanates. 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 tosuch basic concept. Protection of foreign investments, while laudible, is merely a policy. It cannotoverride 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 thehighest bidder solely for the sake of privatization. We are not talking about an ordinary piece ofproperty in a commercial district. We are talking about a historic relic that has hosted many of themost important events in the short history of the Philippines as a nation. We are talking about a hotelwhere heads of states would prefer to be housed as a strong manifestation of their desire to cloakthe dignity of the highest state function to their official visits to the Philippines. Thus the Manila Hotelhas played and continues to play a significant role as an authentic repository of twentieth centuryPhilippine 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 acountry. 51

This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell thehistorical landmark this Grand Old Dame of hotels in Asia to a total stranger. For, indeed, theconveyance of this epic exponent of the Filipino psyche to alien hands cannot be less thanmephistophelian for it is, in whatever manner viewed, a veritable alienation of a nation's soul forsome pieces of foreign silver. And so we ask: What advantage, which cannot be equally drawn froma qualified Filipino, can be gained by the Filipinos Manila Hotel and all that it stands for is soldto a non-Filipino? How much of national pride will vanish if the nation's cultural heritage is entrustedto 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 aqualified, zealous and well-meaning Filipino? This isthe plain and simple meaning of the Filipino First Policyprovision of the Philippine Constitution. Andthis Court, heeding the clarion call of the Constitution and accepting the duty of being the elderlywatchman of the nation, will continue to respect and protect the sanctity of the Constitution.

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTELCORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE GOVERNMENTCORPORATE COUNSEL are directed to CEASE and DESIST from selling 51% of the shares of theManila Hotel Corporation to RENONG BERHAD, and to ACCEPT the matching bid of petitionerMANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the ManilaHotel Corporation at P44.00 per share and thereafter to execute the necessary clearances and to dosuch other acts and deeds as may be necessary for purpose.

SO ORDERED.


Manila


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EN BANC

G.R. No. L-21064 June 30, 1970

J. M. TUASON & CO., INC., petitioner-appellee,vs.

THE LAND TENURE ADMINISTRATION, THE SOLICITOR GENERAL and THE AUDITORGENERAL,respondents-appellants.

Araneta, Mendoza and Papa for petitioner-appellee.

Besa, Aguilar and Gancia, Office of the Solicitor General Felix V. Makasiar, Assistant SolicitorGeneral Frine' C. Zaballero, Solicitor Rosalio A. de Leon and Special Attorney Magno B. Pablo forrespondents-appellants.

R E S O L U T I O N

FERNANDO, J .:

From our decision of February 18, 1970, reversing the judgment of the lower court holding thatRepublic Act No. 2616 as amended is unconstitutional, printed motion for reconsideration was filedby petitioner-appellee on March 31, 1970 reiterating its arguments as to its alleged invalidity forbeing violative of the due process and equal protection guarantees. On May 27, 1970, a detailedopposition to such a motion for reconsideration was filed by the Solicitor General, the HonorableFelix Q. Antonio, on behalf of respondents-appellants. Then came a rejoinder of petitioner, on June15, 1970, to the pleading of the Solicitor General. The motion for reconsideration is thus ripe fordetermination. With due recognition of the vigor and earnestness with which petitioner argued itsmotion, based on what it considered to be our applicable decisions, the Court cannot grant the

same. Our decision stands.

1. It was a unanimous Court that could not locate a constitutional infirmity vitiating Republic Act No.2616 directing the expropriation of the Tatalon Estate in Quezon City. There are points of differencesin the three written opinions, but there is none as to the challenged legislative act being invulnerableon the grounds therein asserted to justify its sought for nullification. While, to repeat, petitionerapparently remains unconvinced, standing fast on the contentions to which it would seek to impartgreater plausibility, still the intent of the framers of the Constitutional Convention, as shown not onlyby the specific provisions allowing the expropriation of landed estates, but also by the social justiceprovision as reflected in our decisions, save possibly Republic vs. Baylosis,1preclude a favorableaction on the impassioned plea of petitioner for a reconsideration of our decision. At any rate, petitioner-appellee can take comfort in the separate opinion of Justice Teehankee, with which four other membersof the Court, including the Chief Justice, are in agreement, to enable it to raise questions, the answers to

which, if its view would be sustained, would certainly afford sufficient protection to what it believes to bean unconstitutional infringement on its property rights.

2. It may not be amiss to make more explicit and categorical what was held in our opinion thatSection 4 of Republic Act No. 2616 prohibiting a suit for ejectment proceedings or the continuance ofone already commenced even in the absence of expropriation proceedings, is unconstitutional, asheld in Cuatico v. Court of Appeals.2Greater emphasis likewise should be laid on our holding that whilean inaccuracy apparent on the face of the challenged statute as to the ownership of the Tatalon Estatedoes not suffice to call for its invalidity, still to erase even a fanciful doubt on the matter, the statement


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therein found in Section 1 of the Act that in addition to petitioner-appellee, Gregorio Araneta & Co., Inc.and Florencio Deudor, et al. are included, cannot be understood as conferring on any juridical or naturalpersons, clearly not entitled thereto, dominical rights over such property in question.

3. In the aforesaid decision of Cuatico v. Court of Appeals, reference was made to the amendatoryAct, Republic Act No. 3453 to Section 4 as it originally was worded in Republic Act No. 2616, the

amendment consisting of the following: "Upon approval of this amendatory Act, no ejectmentproceedings shall be instituted or prosecuted against the present occupants of any lot in saidTatalon Estate, and no ejectment proceedings already commenced shall be continued, and such lotor any portion thereof shall not be sold by the owners of said estate to any person other than thepresent occupant without the consent of the latter given in a public instrument." 3The question beforethe, Court, according, to the opinion penned by Justice Bautista Angelo, was: "Are the provisionsembodied in the amendatory Act which prescribe that upon approval of said Act no ejectmentproceedings shall be instituted or prosecuted against any occupant of any lot in the Tatalon Estate, or thatno ejectment proceedings already commenced shall be continued, constitutional and valid s

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