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Sunday, November 20, 2011

Wilson P. Gamboa v. Finance Secretary Margarito Teves, et al., G.R.No. 17657, !"ne #$, #%11

D E C I S I O NCARPIO, J.:

I.  THE FACTS

T&is is a 'etition to n"lli(y t&e sale o( s&ares o( stoc) o( P&ili''ine Telecomm"nications

*nvestment +or'oration PT*+- by t&e government o( t&e Re'"blic o( t&e P&ili''ines, acting t&ro"g&

t&e *nter/gency Privati0ation +o"ncil *P+-, to Metro Paci(ic /ssets ol2ings, *nc. MP/-, an

a((iliate o( First Paci(ic +om'any 3imite2 First Paci(ic-, a ong 4ongbase2 investment management

an2 &ol2ing com'any an2 a s&are&ol2er o( t&e P&ili''ine 3ong istance Tele'&one +om'anyP3T-.

T&e 'etitioner "estione2 t&e sale on t&e gro"n2 t&at it also involve2 an in2irect sale o( 1#

million s&ares or abo"t 6. 'ercent o( t&e o"tstan2ing common s&ares- o( P3T o8ne2 by PT*+ to

First Paci(ic. Wit& t&e t&is sale, First Paci(ic9s common s&are&ol2ings in P3T increase2 (rom %.7

'ercent to 7 'ercent, t&ereby increasing t&e total common s&are&ol2ings o( (oreigners in P3T to

abo"t $1.:7;. T&is, accor2ing to t&e 'etitioner, violates Section 11, /rticle

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III.  THE R-IN

[The Court partly granted the petition and held that the term “capital” in Section 11, Article XII 

of the Constitution refers only to shares of stock entitled to ote in the election of directors of a pu!lic 

utility, i"e", to the total common shares in #$%T"& 

+onsi2ering t&at common s&ares &ave voting rig&ts 8&ic& translate to control, as o''ose2 to

're(erre2 s&ares 8&ic& "s"ally &ave no voting rig&ts, t&e term Bca'italC in Section 11, /rticle

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 /s s&o8n in P3T9s #%1% G*S, as s"bmitte2 to t&e SA+, t&e 'ar val"e o( P3T common

s&ares is P5.%% 'er s&are, 8&ereas t&e 'ar val"e o( 're(erre2 s&ares is P1%.%% 'er s&are. *n ot&er 

8or2s, 're(erre2 s&ares &ave t8ice t&e 'ar val"e o( common s&ares b"t cannot elect 2irectors an2

&ave only 17% o( t&e 2ivi2en2s o( common s&ares. Moreover, .::; o( t&e 're(erre2 s&ares are

o8ne2 by Fili'inos 8&ile (oreigners o8n only a min"sc"le %.56; o( t&e 're(erre2 s&ares. Worse,

're(erre2 s&ares constit"te 77.$5; o( t&e a"t&ori0e2 ca'ital stoc) o( P3T 8&ile common s&ares

constit"te only ##.15;. T&is "n2eniably s&o8s t&at bene(icial interest in P3T is not 8it& t&e non

voting 're(erre2 s&ares b"t 8it& t&e common s&ares, blatantly violating t&e constit"tional

re"irement o( 6% 'ercent Fili'ino control an2 Fili'ino bene(icial o8ners&i' in a '"blic "tility.

 

*n s&ort, Fili'inos &ol2 less t&an 6% 'ercent o( t&e voting stoc), an2 earn less t&an 6%

'ercent o( t&e 2ivi2en2s, o( P3T. T&is 2irectly contravenes t&e e?'ress comman2 in Section 11,

 /rticle an2 6- 're(erre2 s&ares constit"te

77.$5; o( t&e a"t&ori0e2 ca'ital stoc) o( P3T an2 common s&ares only ##.15;. T&is )in2 o( 

o8ners&i' an2 control o( a '"blic "tility is a moc)ery o( t&e +onstit"tion.

T&"s, t&e Res'on2ent +&air'erson o( t&e Sec"rities an2 A?c&ange +ommission8as DIRECTED by t&e +o"rt to a''ly t&e (oregoing 2e(inition o( t&e term Bca'italC in 2etermining t&e

e?tent o( allo8able (oreign o8ners&i' in res'on2ent P&ili''ine 3ong istance Tele'&one +om'any,

an2 i( t&ere is a violation o( Section 11, /rticle