LONG DISTANCE TELEPHONE COMPANY (PLDT) IN HIS CAPACITY AS

MANAGING DIRECTOR OF FIRST PACIFIC CO., LTD., PRESIDENT NAPOLEON L.

NAZARENO OF PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, CHAIR FE
on filipinazation 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 28 June 2011, the court ruled the case in favor of the petitioner.
Hence this case which resolves the motions for reconsideration of the 28 June
2011 Decision assailing Court's definition of the term "capital" in Section 11, Article XII
of the Constitution, which refers to the ‘shares with voting rights, as well as with full
said that the Constitution is clear in expressing its State policy of developing an
economy  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
ng preferred shares owned by Filipinos, with both classes of share having a par value of
one peso (₱ 1.00) per share. Under the broad definition of the term "capital," such
corporation would be considered compliant with the 40 percent constitutional limit on
foreign equity of public utilities since the overwhelming majority, or more than 99.999
percent, of the total outstanding capital stock is Filipino owned. This is obviously absurd.
In hand, the Filipinos, holding more than 99.999 percent of the equity, cannot
vote in the election of directors and hence, have no control over the public utility. This
starkly circumvents the intent of the framers of the Constitution, as well as the clear
language of the Constitution, to place the control of public utilities in the hands of
Filipinos.
oard members so elected by such foreign shareholders is highly doubtful. As the OSG
pointed out, quoting Justice George Sutherland’s words in Humphrey’s Executor v.
US,44 "x x x it is quite evident that one who holds his office only during the pleasure of
another cannot be depended upon to maintain an attitude of independence against the
latter’s will." Allowing foreign shareholders to elect a controlling majority of the board,
even if al