Article XII (additional cases)

Knights of Rizal v. DMCI (2017)

1. DMCI started construction of Torre De Manila Condominium

2. However the City Council of Manila issued Resolution No. 121 enjoining the Office of the Building Official to temporarily
suspend the Building Permit og DMC citing among others
3. National Historical Commission of the Philippines Dr. Maria Serena I. Diokno maintained that the Torre de Manila project site is
outside the boundaries of the Rizal Park and well to the rear of the Rizal Monument, and thus, cannot possibly obstruct the
frontal view of the National Monument.
4. On 26 November 2013, following an online petition against the Torre de Manila project that garnered about 7,800 signatures,
the City Council of Manila issued Resolution No. 146, reiterating its directive in Resolution No. 121 enjoining the City of Manila’s
building officials to temporarily suspend DMCI-PDI’s Building Permit.
5. The City Council resolution later states that “the City Council of Manila find[s] no cogent reason to deny and/or reverse the
aforesaid recommendation of the [MZBAA] and hereby ratifies] and confirm[s] all previously issued permits, licenses and
approvals issued by the City [Council] of Manila for Torre de Manila[.]”
6. The Knights Of Rizal, a “civic, patriotic, cultural, non- partisan, non-sectarian and non-profit organization”18 created under
Republic Act No. 646, filed a Petition for Injunction seeking a temporary restraining order, and later a permanent injunction,
against the construction of DMCI- PDI’s Torre de Manila condominium project.
7. The KOR argues that the subject matter of the present suit is one of “transcendental importance, paramount public interest,
of overarching significance to society, or with far- reaching implication” involving the desecration of the Rizal Monument.

Issues: Whether or not the Court can issue a writ of mandamus against the officials of the City of Manila to stop the construction of
DMCI-PDI’s Torre de Manila Project; and
Ruling: NOOOOOOoooooo
1. The Constitution states that “[n]o person shall be deprived of life, liberty or property without due process of law x x x.” 61 It is a
fundamental principle that no property shall be taken away from an individual without due process, whether substantive or
procedural.
2. The dispossession of property, or in this case the stoppage of the construction of a building in one’s own property, would violate
substantive due process.
3. The Rules on Civil Procedure are clear that mandamus only issues when there is a clear legal duty imposed upon the office or
the officer sought to be compelled to perform an act, and when the party seeking mandamus has a clear legal right to the
performance of such act.
4. In the present case, nowhere is it found in Ordinance No. 8119 or in any law, ordinance, or rule for that matter, that the
construction of a building outside the Rizal Park is prohibited if the building is within the background sightline or view of the
Rizal Monument.
5. Thus, there is no legal duty on the part of the City of Manila “to consider,” the standards set under Ordinance No. 8119” in
relation to the applications of DMCI-PDI for the Torre de Manila since under the ordinance these standards can never be
applied outside the boundaries of Rizal Park.
6. While the Rizal Park has been declared a National Historical Site, the area where Torre de Manila is being built is a privately-
owned property that is “not part of the Rizal Park that has been declared as a National Heritage Site in 1995,” and the Torre de
Manila area is in fact “well-beyond” the Rizal Park
7. In this case, there can be no determination by this Court that the City of Manila had been negligent or remiss in its duty under
Ordinance No. 8119 considering that this determination will involve questions of fact.
8. DMCI- PDI had been issued the proper permits and had secured all approvals and licenses months before the actual
construction began.
9. Even the KOR could not point to any law that respondent City of Manila had violated and could only point to declarations of
policies by the NHCP and the Venice Charter which do not constitute clear legal bases for the issuance of a writ of mandamus.
10. The Venice Charter is merely a codification of guiding principles for the preservation and restoration of ancient monuments,
sites, and buildings.
11. The Venice Charter is not a treaty and therefore does not become enforceable as law.
12. The main purpose of zoning is the protection of public safety, health, convenience, and welfare. There is no indication that
the Torre de Manila project brings any harm, danger, or hazard to the people in the surrounding areas except that the
building allegedly poses an unsightly view on the taking of photos or the visual appreciation of the Rizal Monument by locals
and tourists.

ISSUE: Whether or not Torre De Manila is a nuisance per se.

RULING: NOOOOOOOOoooo
1. In its petition, the KOR claims that the Torre de Manila is a nuisance per’ se that deserves to be summarily abated even without
judicial proceedings.87 However, during the Oral Arguments, counsel for the KOR argued that the KOR now believes that the
Torre de Manila is a nuisance per accidens and not a nuisance per se.88
2. Article 694 of the Civil Code defines a nuisance as any act, omission, establishment, business, condition of property, or
anything else which:
a. injures or endangers the health or safety of others;
b. annoys or offends the senses;
c. shocks, defies or disregards decency or morality;
d. obstructs or interferes with the free passage of any public highway or street, or any body of water; or
e. hinders or impairs the use of property.
3. The Court recognizes two kinds of nuisances. The first, nuisance per se, is one “recognized as a nuisance under any and all
circumstances, because it constitutes a direct menace to public health or safety, and, for that reason, may be abated summarily
under the undefined law of necessity.”89
4. The second, nuisance per accidens, is that which “depends upon certain conditions and circumstances, and its existence being a
question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a thing in law
constitutes a nuisance.”90
5. It can easily be gleaned that the Torre de Manila is not a nuisance per se. T
6. Later, DMCI-PDI also obtained the right to build under a variance recommended by the MZBAA and granted by the City Council
of Manila.
7. Thus, there can be no doubt that the Torre de Manila project is not a nuisance per se.
8. There is no law prohibiting the construction of the Torre de Manila.

Roy v. Herbosa (2017)

1. The Motion presents no compelling and new arguments to justify the reconsideration of the Decision.
2. Movant’s petition was dismissed based on both procedural and substantive grounds.
3. Regarding the procedural grounds, the Court ruled that petitioners failed to sufficiently allege and establish the existence of a
case or controversy and locus standi on their part to warrant the Court’s exercise of judicial review; the rule on the hierarchy of
courts was violated; and petitioners failed to implead indispensable parties such as the Philippine Stock Exchange, Inc. and
Shareholders’ Association of the Philippines, Inc.5
4. Other than PLDT, the petitions failed to join or implead other public utility corporations subject to the same restriction imposed
by Section 11, Article XII of the Constitution.
5. These corporations are in danger of losing their franchise and property if they are found not compliant with the restrictive
interpretation of the constitutional provision under review which is being espoused by petitioners.
6. They should be afforded due notice and opportunity to be heard, lest they be deprived of their property without due process.
7. Not only are public utility corporations other than PLDT directly and materially affected by the outcome of the petitions, their
shareholders also stand to suffer in case they will be forced to divest their shareholdings to ensure compliance with the said
restrictive interpretation of the term “capital”.
8. Petitioners’ disregard of the rights of these other corporations and numerous shareholders constitutes another fatal procedural
flaw, justifying the dismissal of their petitions.
9. Without giving all of them their day in court, they will definitely be deprived of their property without due process of law.
10. On the substantive grounds, the Court disposed of the issue on whether the SEC gravely abused its discretion in ruling that
respondent PLDT is compliant with the limitation on foreign ownership under the Constitution and other relevant laws as
without merit.
11. The Court reasoned that “in the absence of a definitive ruling by the SEC on PLDT’s compliance with the capital requirement
pursuant to the Gamboa Decision and Resolution, any question relative to the inexistent ruling is premature.”
12. [E]ven if the resolution of the procedural issues were conceded in favor of petitioners, the petitions, being anchored on Rule 65,
must nonetheless fail because the SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it issued SEC-MC No. 8.
13. To the contrary, the Court finds SEC-MC No. 8 to have been issued in fealty to the Gamboa Decision and Resolution.
14. The Decision has painstakingly explained why it considered as obiter dictum that pronouncement in the Gamboa Resolution that
the constitutional requirement on Filipino ownership should “apply uniformly and across the board to all classes of shares,
regardless of nomenclature and category, comprising the capital of a corporation.”
15. The Court stated that: [T]he fallo or decretal/ dispositive portions of both the Gamboa Decision and Resolution are definite,
clear and unequivocal.
16. The fallo of the Gamboa Decision must control over the obiter dictum in the Gamboa Resolution regarding the application of the
60-40 Filipino-foreign ownership requirement to “each class of shares, regardless of differences in voting rights, privileges and
restrictions.”
17. The heart of the controversy is the interpretation of Section 11, Article XII of the Constitution, which provides: “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.”
18. The Gamboa Decision already held, in no uncertain terms, that what the Constitution requires is “[f]ull [and legal] beneficial
ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights x x x must rest in the
hands of Filipino nationals x x x.”
19. And, precisely that is what SEC-MC No. 8 provides, viz.: “x x x For purposes of determining compliance [with the constitutional
or statutory ownership], 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
20. Thus, the definition of “beneficial owner or beneficial ownership” in the SRC-IRR, which is in consonance with the concept of
“full beneficial ownership” in the FIA-IRR, is, as stressed in the Decision, relevant in resolving only the question of who is the
beneficial owner or has beneficial ownership of each “specific stock” of the public utility company whose stocks are under
review.
21. Being considered Filipino, that “specific stock” is then to be counted as part of the 60% Filipino ownership requirement under
the Constitution.
22. To be sure, it would be more prudent and advisable for the Court to await the SEC’s prior determination of the citizenship of
specific shares of stock held in trust - based on proven facts - before the Court proceeds to pass upon the legality of such
determination.

Gamboa v. Teves (2011)

1. This is a petition to nullify the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) by the
government of the Republic of the Philippines, to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of First Pacific
Company Limited (First Pacific), a Hong Kong-based investment management and holding company and a shareholder of the
Philippine Long Distance Telephone Company (PLDT).
2. The petitioner questioned the sale on the ground that it also involved an indirect sale of 12 million shares (or about 6.3 percent
of the outstanding common shares) of PLDT owned by PTIC to First Pacific.
3. With the this sale, First Pacific’s common shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing
the total common shareholdings of foreigners in PLDT to about 81.47%.
4. This, according to the petitioner, violates Section 11, Article XII of the 1987 Philippine Constitution which limits foreign
ownership of the capital of a public utility to not more than 40%.

ISSUE: Does the term “capital” in Section 11, Article XII of the Constitution refer to the total common shares only, or to the total
outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a public utility?
RULING: Only shares of stock entitled to vote in the election of directors and NOT the outstanding K stock.
1. The term “capital” in Section 11, Article XII of the 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 comprising both
common and non-voting preferred shares [of PLDT].
2. Indisputably, one of the rights of a stockholder is the right to participate in the control or management of the corporation.
3. This is exercised through his vote in the election of directors because it is the board of directors that controls or manages the
corporation.
4. In the absence of provisions in the articles of incorporation denying voting rights to preferred shares, preferred shares have the
same voting rights as common shares.
5. However, preferred shareholders are often excluded from any control, that is, deprived of the right to vote in the election of
directors and on other matters, on the theory that the preferred shareholders are merely investors in the corporation for
income in the same manner as bondholders.
6. Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually
have no voting rights, the term “capital” in Section 11, Article XII of the Constitution refers only to common shares.
7. However, if the preferred shares also have the right to vote in the election of directors, then the term “capital” shall include
such preferred shares because the right to participate in the control or management of the corporation is exercised through the
right to vote in the election of directors.
8. Mere legal title is insufficient to meet the 60 percent Filipino-owned “capital” required in the Constitution.
9. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is
required.
10. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipino nationals in
accordance with the constitutional mandate. Otherwise, the corporation is “considered as non-Philippine national[s].”
11. To construe broadly the term “capital” as the total outstanding capital stock, including both common and non-voting preferred
shares, grossly contravenes the intent and letter of the Constitution
12. A broad definition unjustifiably disregards who owns the all-important voting stock, which necessarily equates to control of the
public utility.
13. We shall illustrate the glaring anomaly in giving a broad definition to the term “capital.” Let us assume that a corporation has
100 common shares owned by foreigners and 1,000,000 non-voting preferred shares owned by Filipinos, with both classes of
share having a par value of one peso (P1.00) per share. Under the broad definition of the term “capital,” such corporation would
be considered compliant with the 40 percent constitutional limit on foreign equity of public utilities since the overwhelming
majority, or more than 99.999 percent, of the total outstanding capital stock is Filipino owned. This is obviously absurd.
14. [O]nly holders of common shares can vote in the election of directors [of PLDT], meaning only common shareholders exercise
control over PLDT.
15. Conversely, holders of preferred shares, who have no voting rights in the election of directors, do not have any control over
PLDT.
16. In fact, under PLDT’s Articles of Incorporation, holders of common shares have voting rights for all purposes, while holders of
preferred shares have no voting right for any purpose whatsoever.
17. It must be stressed, and respondents do not dispute, that foreigners hold a majority of the common shares of PLDT.
18. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipinos in
accordance with the constitutional mandate.
19. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is
constitutionally required for the State’s grant of authority to operate a public utility. The undisputed fact that the PLDT
preferred shares, 99.44% owned by Filipinos, are non-voting and earn only 1/70 of the dividends that PLDT common shares
earn, grossly violates the constitutional requirement of 60 percent Filipino control and Filipino beneficial ownership of a public
utility.