CONSTI – ARTICLE XII WHEREAS, the Supreme Court in Heirs of Gamboa v.
Teveset
Section 6. The use of property bears a social function, and all economic
agents shall contribute to the common good. Individuals and private
groups, including corporations, cooperatives, and similar collective
organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote
distributive justice and to intervene when the common good so
demands.
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; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under
the condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires. The State
shall encourage 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.
Section 17. In times of national emergency, when the public interest
so requires, the State may, during the emergency and under
reasonable terms prescribed by it, temporarily take over or direct the
operation of any privately-owned public utility or business affected
with public interest.
Section 18. The State may, in the interest of national welfare or
defense, establish and operate vital industries and, upon payment of
just compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government.
Section 19. The State shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade or
unfair competition shall be allowed.
SEC MC No. 8-2013 (Guidelines on Compliance with Filipino-Foreign
Ownership Requirements)
WHEREAS, the Constitution, the Foreign Investments Act of
1991, ("FIA'') as amended, and other existing laws mandate that a
certain percentage of ownership in corporations engaged in identified
areas of activities and enterprises be reserved to Philippine Nationals;
WHEREAS, Section 15 of the Corporation Code of the
Philippines provides that a corporation which will engage in business
or activity reserved for Filipino citizens shall include in its Articles of
Incorporation a provision stating that no transfer of stock or interest
which shall reduce the ownership of Filipino citizens to less than the
required percentage of the capital stock as provided by existing laws,
shall be allowed;
WHEREAS, Section 17 of the Corporation Code provides that
the Securities & Exchange Commission may reject or disapprove
articles of incorporation or amendments thereto if the percentage of
ownership of the capital stock to be owned by citizens of the
Philippines has not been complied with as required by existing laws or
the Constitution;
WHEREAS, Section 14 of the FIA empowers the Commission
to impose administrative sanctions provided therein for violation of
the FIA and its implementing rules and regulations ("IRR");
al, ruled that the term 'capital' in Section 11, Article XII of the 1987
Constitution refers only to shares of stock entitled to vote in the
election of directors;
WHEREAS, Section 1 (b) of the IRR of FIA clearly requires the
existence of full beneficial ownership of the stocks and appropriate
voting rights in determining whether stocks are owned and held by
Philippine nationals;
WHEREAS, it is essential to ensure that full beneficial
ownership and effective control of the appropriate voting rights lie
with Philippine nationals;
WHEREAS, Section 143 of the Corporation Code and Sections
5 and 72 of the Securities Regulation Code ("SRC'') empower the
Commission to promulgate guidelines, rules and regulations that will
enable it to implement the provisions and purpose of the laws it
implements;
NOW, THEREFORE, the Commission hereby issues and
promulgates the following guidelines on compliance with the
ownership requirements in the Constitution and/or existing laws by
corporations engaged in nationalized or partly nationalized activities:
Section 1. This Circular shall apply to all corporations
("covered corporations") engaged in identified areas of activities or
enterprises specifically reserved, wholly or partly, to Philippine
Nationals by the Constitution, the FIA and other existing laws,
amendments thereto and IRRs of said laws except as may otherwise be
provided therein.
Section 2. All covered corporations shall, at all times, observe
the constitutional or statutory ownership requirement. For purposes
of determining compliance therewith, the required percentage of
Filipino ownership shall be applied to BOTH (a) the total number of
outstanding shares of stock entitled to vote in the election of directors;
AND (b) the total number of outstanding shares of stock, whether or
not entitled to vote in the election of directors.
Corporations covered by special laws which provide specific
citizenship requirements shall comply with the provisions of said law.
Section 3. All Corporate Secretaries of covered corporations
are directed to monitor and observe compliance with the provisions on
ownership requirements provided in the Constitution, the FIA, its IRR,
other applicable laws, rules and regulations and with the provisions of
this Circular.
The Corporate Secretary cannot delegate the responsibility
of complying with the provisions of this Circular without the express
authority from the Board of Directors or Trustees, as the case may be.
Section 4. This Circular shall take effect immediately after its
publication in two (2) national newspapers of general circulation,
provided: that all existing covered corporations which are non-
compliant with Section 2 hereof shall be given a period of one (1) year
from the effectivity of this Circular within which to comply with said
ownership requirement. The Commission may extend the period of
compliance but only in meritorious and exceptional cases, and upon
proper petition.
Failure to comply with this Circular shall subject the juridical
entity, any person, and the corporate officers responsible, to sanctions
provided in Section 14 of the Foreign Investments Act of 1991, as
amended.
Signed this 20th day of May 2013, Mandaluyong City, Philippines.
 Public Service Act

Section 16. Proceedings of the Commission, upon notice and hearing.

- The Commission shall have power, upon proper notice and hearing in
accordance with the rules and provisions of this Act, subject to the
limitationsn and exceptions mentioned and saving provisions to the
contrary :

(a) To issue certificates which shall be known as certificates of public

convenience, authorizing the operation of public service within the
Philippines whenever the Commission finds that the operation of the
public service proposed and the authorization to do business will
promote the public interest in a proper and suitable manner.
Provided, That thereafter, certificates of public convenience and
certificates of public convenience and necessity will be granted only
to citizens of the Philippines or of the United States or to
corporations, co-partnerships, associations or joint-stock companies
constituted and organized under the laws of the Philippines;
Provided, That sixty per centum of the stock or paid-up capital of any
such corporations, co-partnership, association or joint-stock company
must belong entirely to citizens of the Philippines or of the United
States: Provided, further, That no such certificates shall be issued for
a period of more than fifty years.

Section 20. Acts requiring the approval of the Commission. - Subject to

established limitations and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service or for the owner,
lessee or operator thereof, without the approval and authorization of
the Commission previously had -

(i) To sell, alienate or in any manner transfer shares of its capital stock
to any alien if the result of that sale, alienation, or transfer in itself or
in connection with another previous sale shall be the reduction to less
than sixty per centum of the capital stock belonging to Philippine
citizens. Such sale, alienation or transfer shall be void and of no effect
and shall be sufficient cause for ordering the cancellation of the
certificate.