Good Evening Atty. I’ll be reporting about the 2012 case of HEIRS OF GAMBOA VS.

TEVES

To start with, I’ll briefly discuss the summary of the antecedent facts

First SLIDE: Overview of the Antecedent facts

• The issue started when petitioner Gamboa questioned the indirect sale of shares involving almost 12 million
shares of the Philippine Long Distance Telephone Company (PLDT) owned by PTIC to First Pacific. Thus, First
Pacific’s common shareholdings in PLDT increased from 30.7 % to 37 %, thereby increasing the total common
shareholdings of foreigners in PLDT to about 81.47%. The petitioner contends that it violates the
Constitutional provision on Filipinization of public utility, stated in Section 11, Article XII of the 1987 Philippine
Constitution, which limits foreign ownership of the capital of a public utility to not more than 40%.

• Then, in 2011, the court ruled the case in favor of the petitioner, hence this new case, resolving the motion for
reconsideration for the 2011 decision filed by the respondents.

NOTES:

Indirect sale of almost 12 million shares of PLDT owned by PTIC -- First Pacific

Thus first pacific’s common shareholdings in PLDT increased  thereby increasing the total common shareholdings of
foreigners in PLDT to about 81.47%.

FILIPINIZATION - requires that any form of authorization for the operation of public utilities shall be granted only to
"citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by such citizens."

 Filipinization is when ownership is limited to Filipino citizens or Filipino corporation

 Nationalization is when ownership is reserved to the State.

What is a public utility?

 A public utility is a corporation which renders service to the general public for compensation.

What are the features of a public utility?

 Its service is not confined to privileged individuals but is open to an indefinite public.
 The public or private character of a utility does not depend on the number of persons who avail of its
services but on whether or not it is open to serve all members of the public who may require it.

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Second SLIDE:

Doctrine:

Article 12, Section 11

• No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations organized under the laws of the
Philippines, at least sixty per centum (60%)  of whose capital is owned by such citizens.

• The constitutional requirement of at least 60% Filipino ownership applies not only to voting control of the
corporation but also to the beneficial ownership of the corporation.

• It is therefore imperative that such requirement apply uniformly and across the board to all classes of shares,
regardless of nomenclature and category, comprising the capital of a corporation.

NOTES:

Imperative – vital importance

Nomenclature - the body or system of names in a particular field

Voting control +beneficial ownership (60% of the OCS)

OCS- total shares of stock issued under binding subscription contracts to subscribers or stockholders, whether fully
or partially paid, except treasury shares.

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Third SLIDE:

FACTS:

• The Office of the Solicitor General (OSG) (Francis H. Jardeleza) initially filed a Motion for Reconsideration on
behalf of the SEC, assailing the 28 June 2011 Decision. However, it subsequently filed a Consolidated Comment
on behalf of the State, declaring expressly that it agrees with the Court’s definition of the term “capital” in
Section 11, Article XII of the Constitution. During the Oral Arguments on 26 June 2012, the OSG reiterated its
position consistent with the Court’s 28 June 2011 Decision. 

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Fourth SLDIE:

Issue: Whether or not the definition of “capital” in Section 11, Article XII of the Constitution was changed?

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Fifth SLIDE:

Ruling: NO. There is no changes in the longstanding definition of capital. For more than 75 years since the 1935
Constitution, the Court has not interpreted or defined the term “capital” found in various economic provisions of the
1935, 1973 and 1987 Constitutions. There has never been a judicial precedent interpreting the term “capital” in the
1935, 1973 and 1987 Constitutions, until now. Hence, it is patently wrong and utterly baseless to claim that the Court,
in defining the term “capital” in its 28 June 2011 Decision modified, reversed, or set aside the purported long-standing
definition of the term “capital”.

To reiterate, until this case, there has never been a Court ruling categorically defining the
term
• The Court said that the Constitution is clear in expressing its State policy of developing an
economy  ‘effectively controlled’  by Filipinos. Asserting the ideals that our Constitution’s Preamble want to
achieve, that is –  to conserve and develop our patrimony , hence, the State should fortify a Filipino-controlled
economy. 

NOTES:

Last Par: Pursuant to the avowed purpose of the Constitution is to place in the hands of Filipinos the exploitation of our
natural resources.

THE TERM “CAPITAL” IN SECTION 11, ARTICLE XII OF THE CONSTITUTION HAS FAR-REACHING IMPLICATIONS TO THE
NATIONAL ECONOMY. IN FACT, A RESOLUTION OF THIS ISSUE WILL DETERMINE WHETHER FILIPINOS ARE MASTERS, OR
SECOND-CLASS CITIZENS, IN THEIR OWN COUNTRY.

WHAT IS AT STAKE HERE IS WHETHER FILIPINOS OR FOREIGNERS WILL HAVE EFFECTIVE CONTROL OF THE PHILIPPINE
NATIONAL ECONOMY.

“capital” found in the various economic provisions of the 1935, 1973 and 1987 Philippine Constitutions. 60-40
ownership requirement in favor of Filipino citizens in the Constitution is not complied with unless the corporation
“satisfies the criterion of beneficial ownership” and that in applying the same “the primordial consideration is situs of
control

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Seventh SLIDE:

• In the 2011 decision, the Court finds no wrong in the construction of the term ‘capital’ which refers to the
‘shares with voting rights, as well as with full beneficial ownership’ (Art. 12, sec. 10) which implies that the
right to vote in the election of directors coupled with benefits, is tantamount to an effective
control. Therefore, the Court’s interpretation of the term ‘capital’ was not erroneous. 

NOTES:

This is precisely because the right to vote in the election of directors, coupled with full beneficial ownership of stocks,
translates to effective control of a corporation.

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Eight SLIDE:
ISSUE: Whether or not the 60-40 nationality requirement applies to each class of shares?

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Ninth SLIDE:

RULING: YES. The 28 June 2011 Decision declares that the 60 % Filipino ownership required by 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. Mere legal title is insufficient to meet the 60 % Filipino owned “capital” required in the
Constitution. Full beneficial ownership of 60 % of the outstanding capital stock, coupled with 60 % of the voting rights is
required. Full beneficial ownership of the stocks, coupled with appropriate voting rights, is essential . Otherwise, the
corp is considered as non-PH nationals.

Foreign Investments Act (FIA) clarifies, reiterates and confirms the interpretation that the term “capital” in Section 11,
Article XII of the 1987 Constitution refers to shares with voting rights, as well as with full beneficial ownership. This is
precisely because the right to vote in the election of directors, coupled with full beneficial ownership of stocks,
translates to effective control of a corporation.

Notes:

The legal and beneficial ownership of 60% of the OCS must rest in the hands of Fil Nationals. Otherwise, the corp is
considered as non-PH nationals.

"Philippine national" as a Philippine citizen, or a domestic corporation at least "60% of the capital stock outstanding
and entitled to vote"

DELETED SLIDES: (Additional Info)

• Since the constitutional requirement of at least 60 % Filipino ownership applies not only to voting control of the
corporation but also to the beneficial ownership of the corporation, it is therefore imperative that such
requirement apply uniformly and across the board to all classes of shares, regardless of nomenclature and
category, comprising the capital of a corporation.

• Under the Corporation Code, capital stock consists of all classes of shares issued to stockholders, that is,
common shares as well as preferred shares, which may have different rights, privileges or restrictions as stated
in the articles of incorporation.

• Additional notes: The 60-40 ownership requirement in favor of Fil citizens must apply separately to each class of
shares whether common, preferred, preferred voting or any other class of share.

• BEFORE: SEC interpretation: Capital Stock or BOTH voting or non-voting shares.

• The 2011 interpretation of capital can only be applied prospectively. It cannot be applied to corporation
such as PLDT who have all along relied on the consistent reading of “capital” by SEC.
DISPOSITIVE PORTION: WHEREFORE, we DENY the motions for reconsideration WITH FINALITY. No further pleadings
shall be entertained. SO ORDERED.

Republic of the Philippines v. National Commission on Indigenous Peoples, Registry of Deeds et. al

First SLIDE:

Facts: NCIP held that Private Respondents (Heirs of Piraso and Heirs of Abanag) have vested rights over their ancestral
lands located in Baguio Townsite Reservation on the basis of a native title and as mandated by Article XII, Section 5 of
the 1987 Constitution and Sec. 8 of Republic Act No. 8371 (IPRA Law), otherwise known as "The Indigenous Peoples'
Rights Act of 1997.

Antecedent Facts: PR Piraso filed an application for the identification, delineation and recognition of the ancestral land
before Baguio NCIP pursuant to (IPRA) alleging that the ancestral land has been occupied, possessed, and utilized by
them and their predecessors-in-interest for 120 years.

NCIP ordered the issuance of eight (8) Certificates of Ancestral Land Titles (CALTs) under the Heirs of Piraso‘s name

PR are the heirs of Josephine Molintas Abanag, a descendant of an Ibaloi native named Menchi. Menchi originally owned
several parcels of ancestral land located in various parts of what is now known as Baguio City and these parcels were
subsequently inherited by his descendants.

Section 5. The State, subject to the provisions of this Constitution and national development policies and
programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic,
social, and cultural well-being.

The Congress may provide for the applicability of customary laws governing property rights or relations in determining
the ownership and extent of ancestral domain.

SECTION 8.    Rights to Ancestral Lands. — The right of ownership and possession of the ICCs/IPs to their ancestral
lands shall be recognized and protected.

NOTES:

NCIP (National Commission on Indigenous Peoples)

This is a Petition for Review assailing the Decision of the Court of Appeals in CA-G.R. SP No. 126498.

NATIVE TITLE- the interests and rights of indigenous inhabitants in land, whether communal (for common use), group or
individual, possessed under the traditional laws acknowledged by, and the traditional customs observed by, the
indigenous inhabitants.“

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Second SLIDE:

Continuation of FACTS:

CA agrees with the finding of the NCIP that Baguio City is no different from any part of the Philippines and that there is
no sensible difference that merits the city's exclusion from the coverage of the IPRA.

Almost two (2) years after, here now comes the Republic of the Philippines as represented by the Office of the Solicitor
General (OSG) seeking to annul, reverse and set aside the assailed Resolutions of the NCIP through this instant
petition.

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Third SLIDE: Whether or not the Honorable Court of Appeals committed a reversible error when it agreed that the
NCIP resolutions issued to the Private Respondents are valid?

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Fourth SLIDE:

Ruling: Yes

0 Under the facts, the NCIP has no legal authority to issue Certificate of Ancestral Land Title (CALTS) or
Certificates of Ancestral Domain Title (CADTS) in favor of the subject properties included asBaguio townsite
Reservation.

0 Legal Basis:

R.A 8371 (IPRA LAW) expressly excludes the City of Baguio from the application of the general provision of the IPRA as
stated in Section 78 of the said law.

“The City of Baguio shall remain to be governed by its Charter and all lands proclaimed as part of its Townsite
reservation shall remain as such until otherwise reclassified by appropriate legislation.”

Section 78 of the IPRA is clear that the Charter of Baguio City shall govern the determination of land rights within Baguio
City and not the IPRA. In fact, a review of the Congressional Deliberations on both the House and Senate bills which
gave birth to the IPRA reveal that the clear intent of the framers is to exempt Baguio City's land areas particularly the
Baguio City's Townsite Reservation from the coverage of the IPRA.

NOTES:

CHARTER- a document, issued by a sovereign or state, outlining the conditions under which a corporation, colony, city,
or other corporate body is organized, and defining its rights and privileges.

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Fifth SLIDE:

0 The NCIP cannot transgress this clear legislative intent. Absent legislation passed by Congress, the Baguio
Townsite Reservation shall belong to the public and exclusively for public purpose.

0 The Wright Park, the Secretary's Cottage, the Senate President's Cottage, the Mansion House, and the public
roads therein which are all covered by the assailed CALTs shall remain to exist for the benefit and enjoyment of
the public. These subject lands comprise of historical heritage and belong to the State.

NOTES: I’ll show you a few of the covered properties claimed by the Private Respondents.

(Pictures of Wright Park in Benguet, President’s Mansion situated right across wright park & Session Road)

---------- AFTER SHOWING PICTURES --------------

Those aforementioned properties are all covered by the assailed CALTs

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Sixth SLIDE:

While the IPRA does not generally authorize the NCIP to issue ancestral land titles within Baguio City, there are also
recognized exceptions under Section 78.
These refer to :

0 (1) prior land rights and titles recognized and acquired through any judicial, administrative or other process
before the effectivity of the IPRA Law (October 29, 1997); and

0 (2) territories which became part of Baguio after the effectivity of the IPRA.

Now, let’s discuss if the claimed properties by the PR fall with any of these exceptions

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Seventh SLIDE:

0 Upon the establishment of the Baguio Townsite Reservation, there remained a question as to what portions of
the reservation were public and private.

0 If declared private, such lands were registrable under Act No. 496 (Land Registration Act) as provided for by
Act No. 926 (Public Land Act).

0 Court of First Instance (CFI) of Benguet issued a notice on 22 July 1915 requiring all persons claiming lots
inside the Baguio Townsite Reservation to file within six months from the date of the notice petitions for the
registration of their titles under Act No. 496.

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Eight SLIDE:

0 On 13 November 1922, the CFI of Benguet, held that all claims for private lands by all persons not presented for
registration within the period in Act No. 627 are barred forever.

0 Notwithstanding the CFI decision, several native residents of Baguio City sought the exclusion of lands occupied
by them from the Baguio Townsite Reservation.

0 Thus, on 16 August 1954, President Ramon Magsaysay issued Administrative Order No. 55,24 series of 1954. The
said Order authorized the formation of a committee to study the claims of the inhabitants, with a view of
determining whether it was in public interest that the said landholdings be segregated from the Baguio Townsite
Reservation and opened to disposition under the Public Land Act. Forty-eight ( 48) Igorot claimants originally
filed claims under the said administrative order. Two hundred eighty-five (285) others later filed additional
claims. Respondents were not among the original and additional claimants.

The predecsessors of herein private respondents were not among the original and additional claimants.

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Ninth SLIDE:

0 Private claimants to lands within the Baguio Townsite Reservation were given a chance to register their lands in
Case No. 211.

0 In the case of Abanag, she succeeded to two lots claimed by Sumay and Molintas for which Torrens titles were
issued in Case No. 211. The lots, which Abanag now seeks to register, were not previously claimed by her
predecessors in Case No. 211.
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Tenth SLIDE:

0 However, no such claim was filed. In fact, the said lots in the present case were not shown to be part of any
ancestral land after to the effectivity of the IPRA. To stress, private respondents' rights over the subject
properties located in the Townsite Reservation in Baguio City were never recognized in any administrative or
judicial proceedings prior to the effectivity of the IPRA law.

0 The CALTs and CADTs issued by the NCIP to respondents are thus void.

Those aforementioned properties are all covered by the assailed CALTs AND it shall remain to exist for the benefit and
enjoyment of the public.

NOTES:

September 9, 2000 (establishment of baguio townsite reservation)