Public Utilities and Foreign Investment Quiz

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Questions and Answers

What percentage of capital ownership is required for corporations to operate public utilities in the Philippines?

50%

70%

60% (correct)

80%

What is the maximum duration for which a franchise or authorization for public utilities can be granted?

25 years

100 years

75 years

50 years (correct)

Who can grant a legislative franchise directly according to the provisions about public utilities?

Congress (correct)

The President

Local Government Units

The Supreme Court

What role do foreign investors play in public utility enterprises according to the regulations?

They can only hold stakes proportional to their capital Signup and view all the answers

What must be true regarding the executive and managing officers of a public utility corporation?

They must be citizens of the Philippines Signup and view all the answers

Under what condition can the Congress amend or repeal a franchise or right granted for public utilities?

When the common good requires it Signup and view all the answers

What does the state do to encourage public participation in public utilities?

Encourages equity participation by the general public Signup and view all the answers

Which of the following statements about public utility franchises is NOT true?

They can be granted to foreign corporations. Signup and view all the answers

What is a requirement for an undertaking to be classified as a public utility?

It must involve dealing directly with the public. Signup and view all the answers

Which of the following statements about Build-Operate-Transfer (BOT) grantees is true?

The government leases the utility from the BOT grantee. Signup and view all the answers

What is the maximum duration for which a franchise can be granted?

50 years Signup and view all the answers

Who can participate as executive and managing officers in a public utility enterprise?

Only Filipino citizens Signup and view all the answers

In the Gamboa vs Teves case, what was a key issue regarding foreign ownership in PLDT?

'Capital' refers to total outstanding capital stock. Signup and view all the answers

What percentage of common shares does foreign ownership in PLDT account for?

64.27% Signup and view all the answers

Which of the following statements is NOT true about preferred shares in PLDT?

They have voting rights. Signup and view all the answers

What are the conditions under which a franchise can be amended or repealed?

By Congress when the common good requires Signup and view all the answers

What concern was raised about AXN and FOX's foreign ownership?

They are violating foreign ownership restrictions. Signup and view all the answers

What action did Rep. Ridon request from the House of Representatives?

To investigate compliance with nationality restrictions. Signup and view all the answers

What is required for amendments to the Constitution to be proposed by the people?

A petition of at least twelve percent of registered voters. Signup and view all the answers

How often can amendments to the Constitution be proposed according to Section 2?

Only once every five years. Signup and view all the answers

What is the minimum percentage of registered voters required for representation in each legislative district during a constitutional amendment petition?

Three percent. Signup and view all the answers

What majority is required for Congress to call a constitutional convention?

Two-thirds of all Members. Signup and view all the answers

What is the timeframe for holding a plebiscite after certifying the sufficiency of a petition for an amendment?

Sixty to ninety days. Signup and view all the answers

Which group disagreed with the petitions regarding AXN and FOX's foreign ownership?

The SEC, NTC, and MTRCB. Signup and view all the answers

What is the primary effect of House Bill 78 on foreign ownership of public services?

It permits full foreign ownership in transportation and telecommunications. Signup and view all the answers

Which of the following statements about the term 'public utility' is accurate?

It was originally provided by Commonwealth Act 146. Signup and view all the answers

Why did House Minority Leader Bienvenido Amante Jr. oppose House Bill 78?

He argued it was unconstitutional and anti-Filipino. Signup and view all the answers

Which industries are specifically mentioned as being eligible for full foreign ownership under the new amendments?

Airlines and railways. Signup and view all the answers

What impact does Representative Sharon Garin believe House Bill 78 will have on public services?

It will improve the deplorable state of public services. Signup and view all the answers

Which of the following sectors will remain restricted to full foreign equity?

Public utility vehicles and water. Signup and view all the answers

What is a significant change introduced by House Bill 78 regarding the classification of enterprises?

It redefines transportation and telecommunications as 'public service'. Signup and view all the answers

What is the primary constitutional issue raised regarding the definition of 'public utility'?

It lacks a clear legal definition in the Constitution. Signup and view all the answers

What percentage of common shares in PLDT were held by foreigners, according to the Court's ruling?

64.27% Signup and view all the answers

In the context of the Gamboa Decision, what does the term 'capital' specifically refer to?

Common shares only. Signup and view all the answers

What is the minimum percentage of common shares that must be owned by Filipinos in a partially nationalized industry according to the ruling?

60% Signup and view all the answers

What must be ensured when applying the 60-40 ownership requirement to different classes of shares?

That ownership applies uniformly to each class of shares. Signup and view all the answers

Who is directed to apply the definition of 'capital' in determining foreign ownership in PLDT?

The Securities and Exchange Commission. Signup and view all the answers

If a corporation issues both common and preferred non-voting shares, what is the minimum ownership requirement for each class by Filipinos?

60% for common, 60% for preferred. Signup and view all the answers

What is the primary purpose of the 60-40 ownership requirement for public utilities?

To guarantee effective Filipino control. Signup and view all the answers

In the Gamboa Decision, how does the Court differentiate between common shares and non-voting shares?

Only common shares are considered for foreign ownership limits. Signup and view all the answers

Study Notes

Public Utilities and Franchise Regulations

Public utility franchises may only be granted to Filipino citizens or corporations with at least 60% Filipino ownership.
Franchises are restricted to a maximum duration of 50 years and are non-exclusive, meaning Congress can alter or repeal them for public interest.
State encourages public equity participation in utilities.

Foreign Investment Regulations

Foreign participation in the governance of public utility companies is limited to their share in the capital.
Executive and managing positions in these corporations must be held by Philippine citizens.
Foreign ownership must comply with the 60-40 rule, applying separately to each class of shares (common, preferred non-voting, etc.).

Gamboa vs. Teves Case

The Supreme Court ruled that "capital" refers only to voting shares in determining allowable foreign ownership in public utilities, particularly in the case of PLDT.
The decision highlighted discrepancies in PLDT’s capital structure, with foreigners holding a majority of voting shares.

New Public Service Act (House Bill 78)

Approved on March 10, 2020, the act differentiates between "public utilities" (with stricter ownership rules) and “public services,” which can allow full foreign ownership.
Rep. Sharon Garin supports the act for attracting foreign investments; however, opposition exists due to potential constitutional issues and perceived threats to Filipino ownership.
Transportation and telecommunications are reclassified under "public service," allowing foreign firms to operate fully in these sectors.

Commonwealth Act 146

Defines "public utility" in the Philippines and regulates transportation and telecommunications sectors.
Recent amendments permit foreign ownership in select industries while some sectors remain restricted.

Amendments to the Constitution

Proposed amendments can be initiated by the people through petitions from at least 12% of registered voters.
Amendments cannot be proposed more frequently than once every five years post-ratification of the Constitution.
Congress has the authority to call a constitutional convention or put the question of a convention to a vote among members.

Voting and Ratification

Amendments are valid only when ratified by a majority vote in a plebiscite held within a specific timeframe after certification of petition sufficiency.

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Description

Test your knowledge on public utility franchises and foreign investment regulations in the Philippines. This quiz covers topics like ownership rules, franchise duration, and key court decisions such as the Gamboa vs. Teves case. Challenge yourself to understand these important legal frameworks and their implications.