In a 26-page petition for certiorari, Dean Jose M. Roy III said the SEC gravely abused its discretion when it ruled in its previous investigation that PLDT was compliant with the rule on foreign ownership cap under the constitution.
The SEC conducted an investigation against PLDT after the high court ruled that foreign ownership cap under Section 11 Article 12 of the Constitution meant that “capital” should be the shares of stock entitled to vote or the common shares and not to the total outstanding capital stock.
SEC, in its findings, said PLDT was compliant with the constitution and the high court’s ruling that was embodied in Memorandum Circular no. 8 (MC8).
The circular sets forth the guidelines on compliance with foreign ownership in nationalized and partly nationalized industries.
The SEC ruled that in determining the required percentage of Filipino ownership, the following conditions must be applied: 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.
But Roy said the rule did not conform to the previous ruling of the high court.
He was referring to the case filed by Wilson Gamboa where the high court ruled in 2012 that the term capital in Section 11, Article 12 of the 1987 Constitution refers only to “common” shares whose owners can vote in the election of directors.
“The [high court] clearly states that the 60-40 ownership requirement must apply separately to each class of shares. The language of Memorandum Circular No. 8, however, fails to make a distinction between different classes of shares and instead offers only a general distinction between voting and all other shares,” Roy said.
“The standing interpretation of the SEC found in MC8 practically encourages circumvention of the 60-40 ownership rule by impliedly allowing the creation of several classes of voting shares with different degrees of beneficial ownership over the same, but at the same time, not imposing a 40 percent limit on foreign ownership of the higher yielding stocks,” he added.
After the high court issued the ruling in 2012, the PLDT issued a 150 million preferred shares with voting rights to correct the defect reducing foreigners hold of the voting common stock from 58.4 percent to 34.5 percent.