WHEREFORE, We PARTLY GRANT The Petition and Rule That The

GAMBOA V TEVES (facts partly lifted from Allens digest
covering another topic)

acts: Act No. 3436 granted PLDT a franchise and the right to
engage in telecommunications business. General Telephone and
lectronics !orporation "GT#$ an American compan% and a ma&or
PLDT stoc'holder$ sold (6 percent of the outstanding common
shares of PLDT to PT)!. Prime *oldings$ )nc. "P*)# +as
incorporated b% se,eral persons$ P*) became the o+ner of ---$4-.
shares of stoc' of PT)! b% ,irtue of three Deeds of Assignment
e/ecuted b% PT)! stoc'holders. The ---$4-. shares of stoc' of
PT)! held b% P*) +ere se0uestered b% the P!GG. The ---$4-.
PT)! shares$ +hich represent about 46.-(. percent of the
outstanding capital stoc' of PT)!$ +ere later declared b% this !ourt
to be o+ned b% the 1epublic of the Philippines.
.4 percent of PT)! shares +ere sold to *ong 2ong3based firm 4irst
Pacific$ and the remaining 46 percent +as sold through public
bidding b% the )nter3Agenc% Pri,ati5ation !ouncil$ and e,entuall%
ended up being bought b% 4irst Pacific subsidiar% 6etro Pacific
Asset *oldings )nc."6PA*# after the corporation e/ercised its right of
first refusal. The transaction +as an indirect sale of -( million shares
or 6.3 percent of the outstanding common shares of PLDT$ ma'ing
4irst Pacific7s common shareholdings of PLDT to 38 percent and the
total common shareholdings of foreigners in PLDT to 9-.48 percent.
:apanese NTT Do!o6o o+ns .-..6 percent of the other foreign
shareholdings;e0uit%.
Petitioner Gamboa$ alleged that the sale of ---$4-. shares to
6PA* ,iolates <ec. -- of Art. =))of the !onstitution$ +hich limits
foreign o+nership of the capital of a public utilit% to not morethan 4>
percent.
Petitioner raises the follo+ing issues: "-# +hether the consummation
of the then impending sale of ---$4-. PT)! shares to 4irst Pacific
,iolates the constitutional limit on foreign o+nership of a public
utilit%? "(# +hether public respondents committed gra,e abuse of
discretion in allo+ing the sale of the ---$4-. PT)! shares to 4irst
Pacific? and "3# +hether the sale of common shares to foreigners in
e/cess of 4> percent of the entire subscribed common capital stoc'
,iolates the constitutional limit on foreign o+nership of a public
utilit%.
9
!ss"e: @hether or not the !ourt ma% properl% ta'e cogni5ance of
the petition for declarator% relief. AA B<.
#$%!&G:
This !ourt is not a trier of facts. 4actual 0uestions such as those
raised b% petitioner$
C
+hich indisputabl% demand a thorough
e/amination of the e,idence of the parties$ are generall% be%ond this
!ourt7s &urisdiction. Adhering to this +ell3settled principle$ the !ourt
shall confine the resolution of the instant contro,ers% solel% on
the threshold and p"rely legal iss"e of +hether the term DcapitalD
in <ection --$ Article =)) of the !onstitution refers to the total
common shares onl% or to the total outstanding capital stoc'
"combined total of common and non3,oting preferred shares# of
PLDT$ a public utilit%.
Petition for declaratory relief treated as petition for mandamus
At the outset$ petitioner is faced +ith a procedural barrier. Among the
remedies petitioner see's$ onl% the petition for prohibition is +ithin
the original &urisdiction of this court$ +hich ho+e,er is not e/clusi,e
but is concurrent +ith the 1egional Trial !ourt and the !ourt of
Appeals. The actions for declarator% relief$
->
in&unction$ and
annulment of sale are not embraced +ithin the original &urisdiction of
the <upreme !ourt. En this ground alone$ the petition could ha,e
been dismissed outright.
@hile direct resort to this !ourt ma% be &ustified in a petition for
prohibition$
--
the !ourt shall ne,ertheless refrain from discussing the
grounds in support of the petition for prohibition since on (9
4ebruar% (>>8$ the 0uestioned sale +as consummated +hen 6PA*
paid )P! P(.$(-8$..6$>>> and the go,ernment deli,ered the
certificates for the ---$4-. PT)! shares.
*o+e,er$ since the threshold and purel% legal issue on the definition
of the term DcapitalD in <ection --$ Article =)) of the !onstitution has
far3reaching implications to the national econom%$ the !ourt treats
the petition for declarator% relief as one for mandamus.
-(
)n short$ it is +ell3settled that this !ourt ma% treat a petition for
declarator% relief as one for mandamus if the issue in,ol,ed has far3
reaching implications. As this !ourt held in Salvacion:
The !ourt has no original and e/clusi,e &urisdiction o,er a petition
for declarator% relief. 'o(ever) e*ceptions to this r"le have +een
recogni,ed- Th"s) (here the petition has far.reaching
implications and raises /"estions that sho"ld +e resolved) it
may +e treated as one for mandam"s.
The instant petition therefore presents the !ourt +ith another
opportunit% to finall% settle this p"rely legal iss"e +hich is of
transcendental importance to the national econom% and a
fundamental re0uirement to a faithful adherence to our !onstitution.
The !ourt must forth+ith sei5e such opportunit%$ not onl% for the
benefit of the litigants$ but more significantl% for the benefit of the
entire 4ilipino people$ to ensure$ in the +ords of the !onstitution$ Da
self3reliant and independent national econom% effectively
controlled b% 4ilipinos.D
-9
Fesides$ in the light of ,ague and
confusing positions ta'en b% go,ernment agencies on this purel%
legal issue$ present and future foreign in,estors in this countr%
deser,e$ as a matter of basic fairness$ a categorical ruling from this
!ourt on the e/tent of their participation in the capital of public
utilities and other nationali5ed businesses.
Despite its far3reaching implications to the national econom%$ this
purel% legal issue has remained unresol,ed for o,er 8. %ears since
the -C3. !onstitution. There is no reason for this !ourt to e,ade this
e,er recurring fundamental issue and dela% again defining the term
Dcapital$D +hich appears not onl% in <ection --$ Article =)) of the
!onstitution$ but also in <ection ($ Article =)) on co3production and
&oint ,enture agreements for the de,elopment of our natural
resources$
-C
in <ection 8$ Article =)) on o+nership of pri,ate
lands$
(>
in <ection ->$ Article =)) on the reser,ation of certain
in,estments to 4ilipino citi5ens$
(-
in <ection 4"(#$ Article =)G on the
o+nership of educational institutions$
((
and in <ection --"(#$ Article
=G) on the o+nership of ad,ertising companies.
:ust so alam natin$ the ending is:
WHEREFORE, we PARTLY GRANT the petition and rule that the
term "capital" in Section 11, Article XII of the 1987 Constitution refers
onl to shares of stoc! entitled to vote in the election of directors,
and thus in the present case onl to common shares, and not to the
total outstandin" capital stoc! #common and non$votin" preferred
shares%& 'espondent Chairperson of the Securities and ()chan"e
Commission is DRE!TED to appl this definition of the term
"capital" in determinin" the e)tent of allowa*le forei"n ownership in
respondent +hilippine ,on" -istance .elephone Compan, and if
there is a violation of Section 11, Article XII of the Constitution, to
impose the appropriate sanctions under the law&

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WHEREFORE, We PARTLY GRANT The Petition and Rule That The

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GAMBOA V TEVES (facts partly lifted from Allens digest

covering another topic)

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