Friday, July 5, 2013


Heirs of Wilson P. Gamboa vs. Finance Secretary Margarito Teves Et Al.
G.R. No. 176579, October 9, 2012

Heirs of Wilson P. Gamboa vs. Finance Secretary Margarito Teves Et Al.

G.R. No. 176579, October 9, 2012

[Constitutional Law, Corporation]

The term “capital” does not refer to both preferred and common stocks treated as the same class of shares regardless of differences in voting rights and privileges.

Consistent with the constitutional mandate that the “State shall develop a self-reliant and independent national economy effectively controlled by Filipinos,” the term "capital" means the outstanding capital stock entitled to vote (voting stock), coupled with beneficial ownership, both of which results to "effective control."

"Mere legal title is insufficient to meet the 60 percent Filipino owned “capital” required in the Constitution for certain industries. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent  of the voting rights, is required." In this case, such twin requirements must apply uniformly and across the board to all classes of shares comprising the capital. Thus, "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." This guarantees that the “controlling interest” in public utilities always lies in the hands of Filipino citizens.

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