EN
BANC
G.R. No.
176579 -- Wilson P. Gamboa, Petitioner, versus Finance
Secretary Margarito B. Teves, Finance Undersecretary John P. Sevilla, and
Commissioner Ricardo Abcede of the Presidential Commission on Good Government
(PCGG) in their capacities as Chair and Members, respectively, of the
Privatization Council, et al., Respondents.
Promulgated:
June 28, 2011
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DISSENTING
OPINION
ABAD, J.:
In 1928, the legislature
enacted Act 3436, granting Philippine Long Distance Telephone Company (PLDT) a
franchise to provide telecommunications services across the country. Forty years later in 1969, General Telephone
and Electronics Corporation, an American company and major PLDT stockholder,
sold 26% of PLDTs equity to the Philippine Telecommunications Investment
Corporation (PTIC).
Subsequently, PTIC assigned 46%
of its equity or 111,415 shares of stock to Prime Holdings, Inc. In 1986, the Presidential Commission on Good
Government sequestered these shares.
Eventually, the Court declared these as properties of the Republic of
the
In 1999, First Pacific, a
Bermuda-registered and Hongkong-based investment firm, acquired the remaining
54% of PTICs equity in PLDT.
In 2006, the governments Inter-agency
Privatization Council offered to auction the 46% PTIC equity in PLDT that the
Court adjudged to the Republic. Parallax
Venture Fund XXVII won with a bid of P25.2 billion or US$510 million. First Pacific announced that it would exercise
its right of first refusal and buy those shares by matching Parallaxs bid. In 2007, First Pacific, through its
subsidiary, Metro Pacific Assets Holdings, Inc., entered into a Conditional
Sale and Purchase Agreement with the national government involving the 46% PTIC
equity for P25.2 billion or US$510 million.
In this petition for
prohibition, injunction, declaratory relief, and declaration of nullity of
sale, petitioner Wilson P. Gamboa, a PLDT stockholder, seeks to annul the sale
of the 46% PTIC equity or 111,415 shares of stock to Metro Pacific on the
ground that it violates Section 11, Article XII of the 1987 Constitution which
limits foreign ownership of a public utility company to 40% of its capital. Gamboa claims that since PTIC is a PLDT
stockholder, the sale of the 46% of its equity is actually an indirect sale of
6.3% PLDT equity or 12 million shares of stock. This would increase First Pacifics equity in
PLDT from 30.7% to 37%, and concomitantly increase the common shareholdings of
foreigners in PLDT to about 64.27%.
The action presents two primordial
issues:
1. Whether or not the Court can hear and decide Gamboas petition
for prohibition, injunction, declaratory relief, and declaration of nullity of
sale; and
2. Whether or not Metro Pacifics acquisition of 46% of PTICs equity
violates the constitutional limit on foreign ownership of the capital of PLDT,
a public utility company, provided under Section 11, Article XII of the 1987
Constitution.
One. The objection to the idea of the Court
hearing and deciding Gamboas action seems to have some basis in the
rules. Under Section 1, Rule 56 of the
Rules of Court, only the following cases may be filed originally in the Supreme
Court:
Sec. 1. Original cases cognizable.Only petitions for certiorari, prohibition, mandamus, quo warranto, habeas corpus, disciplinary proceedings against members of the judiciary and attorneys, and cases affecting ambassadors, other public ministers and consuls may be filed originally in the Supreme Court.
Strictly speaking, Gamboa actions for injunction,
declaratory relief, and declaration of nullity of sale are not among the cases that
can be initiated before the Supreme Court. Those actions belong to some other tribunal.
And, although the Court has original jurisdiction in
prohibition cases, the Court shares this authority with the Court of Appeals
and the Regional Trial Courts. But this
concurrence of jurisdiction does not give the parties absolute and unrestrained
freedom of choice on which court the remedy will be sought. They must observe the hierarchy of courts.[1] As a rule, the Supreme Court will not
entertain direct resort to it unless the remedy desired cannot be obtained in
other tribunals. Only exceptional and
compelling circumstances such as cases of national interest and of serious
implications justify direct resort to the Supreme Court for the extraordinary
remedy of writ of certiorari, prohibition, or mandamus.[2]
The majority of the Court of course suggests that
although Gamboa entitles his actions as ones for injunction, declaratory
relief, and declaration of nullity of sale, what controls the nature of such actions
are the allegations of his petition. And
a valid special civil action for mandamus can be made out of those allegations
since respondent Secretary of Finance, his undersecretary, and respondent Chairman
of the Securities and Exchange Commission are the officials who appear to have
the duty in law to implement the foreign ownership restriction that the Constitution
commands.[3]
To a certain extent, I agree with the position that
the majority of my colleagues takes on this procedural issue. I believe that a case can be made for giving
due course to Gamboas action. Indeed, there
are in his actions compelling reasons to relax the doctrine of hierarchy of
courts. The need to address the
important question of defining the constitutional limit on foreign ownership of
public utilities under Section 11, Article XII of the 1987 Constitution, a
bedrock policy adopted by the Filipino people, is certainly a matter of serious
national interest. Such policy is
intended to develop a self-reliant and independent national economy effectively
controlled by Filipino entrepreneurs.
Indeed, as the Court said in Espina v. Zamora,[4]
the provisions of Article XII of the 1987 Constitution lay down the ideals of
economic nationalism. One of these is
the Filipinization of public utilities under Section 11 which recognizes the
very strategic position of public utilities both in the national economy and
for national security.[5] The participation of foreign capital is encouraged
since the establishment and operation of public utilities may require the
investment of substantial capital that Filipino citizens could possibly not
afford. But at the same time, the
Constitution wants to limit foreign involvement to prevent them from assuming
control of public utilities which may be inimical to national interest.[6]
Two. Still, the
question is whether it is for the Court to decide in this case the shape and
substance of what the Constitution meant when it restricted the size of foreign
ownership of the capital of public utility corporations provided for in Section
11, Article XII of the 1987 Constitution which reads:
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 of whose capital is owned by such citizens; x x x.
Gamboa contends that the constitutional limit on
foreign ownership in public utilities should be based on the ownership of common or voting shares since it is through voting that stockholders are able
to have control over a corporation.
Preferred or non-voting shares should be excluded from the reckoning.
But this interpretation,
adopted by the majority, places on the Court the authority to define and
interpret the meaning of capital in section 11. I believe, however, that such authority
should be for Congress to exercise since it partakes of policy making founded
on a general principle laid down by the fundamental law. The capital restriction written in the
constitution lacks sufficient details for orderly and meaningful implementation. Indeed, in the twenty-four years that the
provision has been in the Constitution, no concrete step has been taken by any
government agency to see to its actual implementation given the absence of
clear legislative guidance on how to go about it.
It has been said that a
constitution is a system of fundamental laws for the governance and
administration of a nation. It
prescribes the permanent framework of a system of government, assigns to the
different departments their respective powers and duties, and establishes
certain fixed principles on which the government is founded.[7] But while some constitutional provisions are
self-executing, others are not.
A constitutional provision is
self-executing if it fixes the nature and extent of the right conferred and the
liability imposed such that they can be determined by an examination and
construction of its terms, and there is no language indicating that the subject
is referred to the legislature for action. On the other hand, if the provision needs a
supplementary or enabling legislation, it is merely a declaration of policy and
principle which is not self-executing.[8]
Here, the Constitution simply
states that no franchise for the operation of a public utility shall be granted to a
corporation organized under Philippine laws unless at least sixty per centum of
its capital is owned by Filipino citizens.
Evidently, the Constitution fails to provide for the meaning of the term
capital, considering that the shares of stock of a corporation vary in kinds. The usual classification depends on how
profits are to be distributed and which stockholders have the right to vote the
members of the corporations board of directors.
The Corporation Code does not
offer much help, albeit it only confuses, since it uses the terms capital,
capital stock, or outstanding capital stock interchangeably. Capital refers to the money, property, or
means contributed by stockholders in the corporation and generally implies that
the same have been contributed in payment for stock issued to the stockholders.[9] Capital stock signifies the amount
subscribed and paid-in in money, property or services.[10] Outstanding capital stock means the total
shares of stock issued to stockholders, whether or not fully or partially paid,
except treasury shares.[11]
Meanwhile, the Foreign
Investments Act of 1991 defines a Philippine national as, among others, a
corporation organized under the laws of the
On the other hand, government
agencies such as the Securities and Exchange Commission, institutions, and
corporations (such as the Philippine National Oil Company-Energy Development
Corporation) interpret the term capital to include both preferred and common
shares.[14]
Under this confusing
legislative signals, the Court should not leave the matter of compliance with
the constitutional limit on foreign ownership in public utilities, a matter of transcendental
importance, to judicial legislation especially since any ruling the Court makes
on the matter could have deep economic repercussions. This is not a concern over which the Court
has competence. The 1987 Constitution
laid down the general framework for restricting foreign ownership of public
utilities. It is apt for Congress to build
up on this framework by defining the meaning of capital, establishing rules
for the implementation of the State policy, providing sanctions for its
violation, and vesting in the appropriate agency the responsibility for
carrying out the purposes of such policy.
Parenthetically, there have
been several occasions in the past where Congress provided supplementary or
enabling legislation for constitutional provisions that are not self-executing.
To name just some: the Comprehensive
Agrarian Reform Law of 1988,[15]
the Indigenous Peoples Rights Act of 1997,[16]
the Local Government Code of 1991,[17]
the Anti-Graft and Corrupt Practices Act,[18]
the Speedy Trial Act of 1998,[19] the
Overseas Absentee Voting Act of 2003,[20] the
Party-List System Act,[21]
the Paternity Leave Act of 1996,[22]
and the Solo Parents' Welfare Act of 2000.[23]
Based on the foregoing, I vote
to DENY the petition on the ground
that the constitutional limit on foreign ownership in public utilities under
Section 11, Article XII of the 1987 Constitution is not a self-executing
provision and requires an implementing legislation for its enforcement.
ROBERTO
A. ABAD
Associate Justice
[1] Fortich v.
[2] Springfield Development
Corporation, Inc. v. Presiding Judge, RTC, Misamis Oriental, Br. 40, Cagayan de
Oro City, G.R. No. 142628, February 6, 2007, 514
SCRA 326, 342-343; Fortich v. Corona,
id.
[3]
Decision, p. 10.
[4] G.R. No.
143855, September 21, 2010.
[5] Bernas, Joaquin G., Foreign Relations in Constitutional Law, 1995 Ed., p. 87
citing Smith, Bell and Co. v. Natividad,
40 Phil 136, 148 (1919); Luzon
Stevedoring Corporation v. Anti-Dummy Board, 46 SCRA 474, 490 (1972); De Leon, Hector S., Philippine Constitutional
Law (Principles and Cases), 2004 Ed., Vol. 2, p. 940.
[6] De
[7] Manila Prince Hotel v. Government Service Insurance System, G.R. No. 122156, February 3, 1997,
267 SCRA 408, 430.
[8]
[9] Agpalo, Ruben E., Comments on the Corporation Code of the Philippines, 2001 Ed., p. 50.
[10]
[11] Section 137. The Corporation Code.
[12] Sec. 3. Definitions. - As used in this Act:
a. The term Philippine national shall mean a
citizen of the Philippines; of a domestic partnership or association wholly
owned by citizens of the Philippines; or a corporation organized under the laws
of the Philippines of which at least sixty percent (60%) of the capital stock
outstanding and entitled to vote is owned and held by citizens of the
Philippines; or a corporation organized abroad and registered as doing business
in the Philippines under the Corporation Code of which one hundred percent
(100%) of the capital stock outstanding and entitled to vote is wholly owned by
Filipinos or a trustee of funds for pension or other employee retirement or
separation benefits, where the trustee is a Philippine national and at least
sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non-Filipino stockholders
own stocks in a Securities and Exchange Commission (SEC) registered enterprise,
at least sixty percent (60%) of the capital stock outstanding and entitled to
vote of each of both corporations must be owned and held by citizens of the
Philippines and at least sixty percent (60%) of the members of the Board of
Directors of each of both corporations must be citizens of the Philippines, in
order that the corporation, shall be considered a Philippine national. (As
amended by Republic Act 8179)
[13] Decision, pp.
25-26.
[14]
[15] Section 21, Article
II.
[16] Section 22, Article
II.
[17] Section 25, Article II.
[18] Section 27, Article II.
[19] Section 16, Article III.
[20] Section 2, Article V.
[21] Section 5, Article VI.
[22] Section 3, Article XIII.
[23]