GAMBOA vs.

TEVES (2012)

Motion for Reconsideration DENIED

I.
capital in Sec. 11, Art. XII of Constitution has far-reaching implications to the national economy
and its resolution would determine WON Filipino are masters or 2nd class citizens in our
country.
Whether Filipinos or foreigners ha effective control of Philippine national economy.
Hence, the far-reaching implications of the issue justify the treatment of the petition as one for
mandamus.
II.
For 75 years, until the present case, there has never been a Court ruling categorically defining
capital found in the various economic provisions of the different Philippine Constitutions.
DOJ and SEC opinions are compatible with the Courts interpretation of the 60-40 ownership
requirement in favor of Filipino citizens mandated by the Constitution for certain economic
activities. At the same time, these opinions highlight the conflicting, contradictory, and
inconsistent positions taken by the DOJ and the SEC on the definition of the term capital found
in the economic provisions of the Constitution. But with regard to the opinion of SEC legal
officers, it does not constitute a rule or regulation of the SEC, for the law requires a SEC en
banc opinion.
The SEC en banc ruling in the McArthur Mining Case conforms with the 2011 Decision on that
the 60-40 ownership in the Constitution to engage in certain economic activities applies not only
to voting control of the corporation, but also to the beneficial ownership of the
corporation.
Full beneficial ownership of 60%of the outstanding capital stock, coupled with 60% of the voting
rights, is required.
In his MR, PSE President cites diff. cases in arguing that the Court has already defined capital
in Sec. 11, Art. XII. This is mistaken as these cases never mentioned Sec. 11, Art. XII and thus
cannot serve as precedent in its interpretation.

III.
Under Sec. 11, Art. XII, to own and operate a public utility a corporations capital must at least
be 60 percent owned by Philippine nationals.
FIA defines Philippine national as a Philippine citizen, or a domestic corporation at least 60%
of the capital stock outstanding and entitled to vote is owned by Philippine citizens.
FIA is the basic law governing foreign investments in the Philippines, irrespective of the nature
of business and area of investment. Sec. 8 of which enumerates the investment areas reserved
to Philippine nationals. FIA is abundant notice to foreign investors to what extent they can invest
in public utilities in the Philippines.
Negative List A of the FIA reserves the ownership and operation of public utilities only to
Philippine nationals, defined in Section 3(a) of the FIA as (1) a citizen of the Philippines; x x x
or (3) a corporation organized under the laws of the Philippines of which at least sixty percent
(60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the
Philippines;
2011 decision highlighted that 60% of Filipino ownership required to engage in economic
activities applies not only to voting control of the corporation, but also to the beneficial
ownership of the corporation. Consistent with FIA which provides that full beneficial
ownership of stocks, coupled with appropriate voting rights, is essential.
It is provided also that if a corporation, engaged in a partially nationalized industry, issues a
mixture of common and preferred non-voting shares, at least 60% of common shares and at
least 60% of preferred non-voting shares must be owned by Filipinos.