G.R. No. 176579 June 28, 2011 WILSON P. GAMBOA, Petitioner, vs.

FINANCE SECRETARY MARGARITO B. TEVES, et al

Carpio, J.

Facts:
Wilson Gamboa is a stockholder of Philippine Long Distance Telephone Company (PLDT) who
filed a petition for prohibition, injunction, declaratory relief and declaration of nullity of the sale
of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) as this would
increase their share to 37%, and, combined with Japanese NTT DoCoMo's common shareholdings
in PLDT, would result to a total foreign common shareholdings in PLDT of 51.56%. Petitioner
argues this is a violation of Section 11, Article 12 of the 1987 Constitution which states that, 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 of whose capital is owned by such citizens,
nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period
than fifty years.

Issue:
Whether or not the common share owned and PTIC exceeding the mandated 40% owned by
foreign investors is violative of Article 12, Section 11 of the 1987 Constitution.

Ruling:
Yes, since the said provision encourages equity participation in public utilities by the general
public. The participation of foreign investors in the governing body of any public utility enterprise
shall be limited to their proportionate share in its capital, and all the executive and managing
officers of such corporation or association must be citizens of the Philippines.

Ratio Decidendi:
• The provision is [an express] recognition of the sensitive and vital position of public
utilities both in the national economy and for national security.
• Obviously, the intent of the framers of the Constitution in imposing limitations and
restrictions on fully nationalized and partially nationalized activities is for Filipino
nationals to be always in control of the corporation undertaking said activities. Therefore,
the forty percent (40%) foreign equity limitation in public utilities prescribed by the
Constitution refers to ownership of shares of stock entitled to vote, i.e., common shares.
• Section 11, Article XII of the Constitution, like other provisions of the Constitution
expressly reserving to Filipinos specific areas of investment, such as the development of
natural resources and ownership of land, educational institutions and advertising business,
is self-executing. There is no need for legislation to implement these self-executing
provisions of the Constitution.