The High Court said SEC should define "capital" as '"shares of stock entitled to vote in the election of

directors" or common shares, and not as total outstanding capital stock, which covers both common and
non-voting preferred shares.

But the 60-40 ownership requirement in favor of Filipino citizens must apply separately to each class of
shares, whether common, preferred non-voting, preferred voting or any other

class of shares. Gamboa v TevesG.R. No. 176579

The Court held that the term capital in the Constitution refers not only to shares with voting rights but
also to shares without voting rights. Thus, if a corporation, engaged in a partially nationalized industry,
issues a mixture of common and preferred non-voting shares, at least 60 percent of the common shares
and at least 60 percent of the preferred non-voting shares must be owned by Filipinos.

In short, the 60-40 ownership requirement in favour of Filipino citizens must apply separately to each
class of shares, whether common, preferred non-voting, preferred voting or any other class of shares.
For what is at stake in the interpretation of the term capital is whether Filipinos or foreigners will have
effective control of the national economy.