GR 176579; (October, 2012) (Digest)
G.R. No. 176579 October 9, 2012
HEIRS OF WILSON P. GAMBOA, Petitioners, vs. FINANCE SECRETARY MARGARITO B. TEVES, et al., Respondents.
FACTS
This case involves motions for reconsideration of the Court’s June 28, 2011 Decision. The core dispute concerns the proper interpretation of the term “capital” in Section 11, Article XII of the 1987 Constitution , which mandates that ownership and operation of public utilities shall be reserved to Filipino citizens, with at least sixty percent (60%) of their “capital” owned by such citizens. Petitioners argued that “capital” refers only to shares with voting rights. Respondents, including the Philippine Stock Exchange and PLDT officials, contended that the term has long been understood to encompass the total outstanding capital stock, both voting and non-voting.
Movants for reconsideration argued that the Court’s 2011 Decision introduced a new, midstream redefinition of “capital,” overturning a long-standing administrative interpretation by the Securities and Exchange Commission (SEC). They asserted this redefinition created instability. The Office of the Solicitor General initially filed a motion for reconsideration for the SEC but later filed a Consolidated Comment expressly agreeing with the Court’s definition of “capital” as voting shares.
ISSUE
Whether the term “capital” in Section 11, Article XII of the 1987 Constitution refers only to shares with voting rights, or to the total outstanding shares of stock (both voting and non-voting).
RULING
The Supreme Court denied the motions for reconsideration and affirmed its June 28, 2011 Decision. The Court held that the term “capital” in the constitutional provision refers only to shares of stock entitled to vote, i.e., the common shares. The legal logic is anchored on the constitutional intent to ensure Filipino control over public utilities. Effective control is exercised through voting rights. Allowing non-voting preferred shares held by foreigners to be counted as part of the “capital” would dilute Filipino equity and undermine the constitutional requirement of Filipino dominance in the ownership and control of these strategic industries.
The Court rejected the claim of a “midstream redefinition,” stating there was no prior judicial precedent interpreting the term “capital” in the economic provisions of the 1935, 1973, or 1987 Constitutions. Thus, the 2011 Decision did not reverse any settled judicial doctrine. The Court also noted that past SEC and DOJ opinions on the matter were conflicting and inconsistent, providing no basis for a claim of a uniform, long-standing administrative interpretation. The transcendental importance of the issue—determining whether Filipinos or foreigners exercise effective control of the national economy—justified resolving the case on its merits for the guidance of the public and all concerned parties.