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    Gamboa v. Teves Doctrines (Nationality of Corporations)

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    The Supreme Court reversed its previous ruling and held that the 60% Filipino ownership requirement in the Constitution applies uniformly to all classes of shares in a corporation, including both common and preferred shares. This is because the constitutional intent is not just voting control but beneficial ownership of the corporation. Thus, if a corporation issues both common and preferred non-voting shares, at least 60% of each class must be owned by Filipinos. Applying the 60-40 rule uniformly to each class of shares issued guarantees effective Filipino control of public utilities as mandated by the Constitution.

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    Gamboa v. Teves Doctrines (Nationality of Corporations)

    Uploaded by

    Trin
    191 views1 page
    The Supreme Court reversed its previous ruling and held that the 60% Filipino ownership requirement in the Constitution applies uniformly to all classes of shares in a corporation, including both common and preferred shares. This is because the constitutional intent is not just voting control but beneficial ownership of the corporation. Thus, if a corporation issues both common and preferred non-voting shares, at least 60% of each class must be owned by Filipinos. Applying the 60-40 rule uniformly to each class of shares issued guarantees effective Filipino control of public utilities as mandated by the Constitution.

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    The Supreme Court reversed its previous ruling and held that the 60% Filipino ownership requirement in the Constitution applies uniformly to all classes of shares in a corporation, including both common and preferred shares. This is because the constitutional intent is not just voting control but beneficial ownership of the corporation. Thus, if a corporation issues both common and preferred non-voting shares, at least 60% of each class must be owned by Filipinos. Applying the 60-40 rule uniformly to each class of shares issued guarantees effective Filipino control of public utilities as mandated by the Constitution.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    191 views1 page

    Gamboa v. Teves Doctrines (Nationality of Corporations)

    Uploaded by

    Trin
    The Supreme Court reversed its previous ruling and held that the 60% Filipino ownership requirement in the Constitution applies uniformly to all classes of shares in a corporation, including both common and preferred shares. This is because the constitutional intent is not just voting control but beneficial ownership of the corporation. Thus, if a corporation issues both common and preferred non-voting shares, at least 60% of each class must be owned by Filipinos. Applying the 60-40 rule uniformly to each class of shares issued guarantees effective Filipino control of public utilities as mandated by the Constitution.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Gamboa v.

    Teves
    [G.R. No. DATE]
    TOPIC: Nationality of Corporations
    PONENTE:
    CASE LAW/ DOCTRINE:

    AUTHOR:
    NOTES: From the reviewer lang.
    For the facts yung digest na lang ni Thad before.

    In GR NO 176579, June 28, 2011, the SC ruled as follows:


    The term capital in Section 11, Articles XII of the 1987 Constitution refers only to shares of stock entitled to vote in the
    election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock
    (common and non-voting preferred shares).
    The 60 % of the capital assumes, or should result in, controlling interest in the corporation. Compliance with the
    required Filipino ownership of a corporation shall be determined on the basis of outstanding capital stock whether fully
    paid or not, but only such stocks which are generally entitled to voted are considered.
    For stocks to be deemed owned and held by Philippine citizen or nationals, mere legal title is not enough to meet the
    required Filipino equity. Full beneficial ownership of the stocks, coupled with appropriate voting rights is essential. Thus
    stocks, the voting rights of which have been assigned or transferred to aliens cannot be considered held by Philippine
    citizens or Philippine nationals.
    Individuals or juridical entities not meeting the aforementioned qualifications are considered as non-Philippine nationals.
    In the 2012 case of Gamboa v. Teves, the SC reversed the previous ruling and held that:
    Since the constitution 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 the corporation.
    Under the Corporation Code, capital stocks 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 AOI.
    Since a specific class of shares may have rights and privileges or restrictions different from the rest of the shares in a
    corporation, the 60-40 ownership requirement in favor of Filipino citizens in Sec.11 Art.XII of the Constitution must apply
    not only to shares without voting rights. Preferred shares, denied the right to vote in the election of directors, are anyway
    still entitled to vote on the 8 specific matters mentioned in Sec. 6 of Corporation Code. Thus, if a corporation engaged in
    partially nationalized industry, issues a mixture of common and preferred non-voting shares, at least 60% of the common
    shares and at least 60% of the preferred non-voting shares must be owned by Filipinos. If a corporation issues only a single
    class of shares, at least 60% percent of such shares must be owned by Filipinos.
    In short, 60-40 ownership requirement in favor of Filipino citizens must apply separately to each class of shares (whether
    common, preferred non-voting, preferred voting or any class of shares). The uniform application of 60-40 in favor of
    Filipino citizen clearly breathes life to the constitutional command that ownership and operation of public utilities shall be
    reserved exclusively to corporations at least 60% of whose capital is Filipino-owned. Applying the uniform 60-40
    ownership requirement in favor of Filipino citizens to each class of shares, regardless of differences in voting rights,
    privileges and restrictions, guarantees effective Filipino control of public utilities as mandated by the Constitution.

    DISSENTING/CONCURRING OPINION(S):

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