SC upholds PLDT’s 60-40 position

The Supreme Court on Wednesday junked a petition questioning the Securities and Exchange Commission (SEC) guidelines applying the high tribunal’s 2011 ruling on how to determine the  60-40 ownership in Philippine Long Distance Telephone Co. (PLDT).

The court denied, for “lack of merit both on procedural and substantive grounds,”  the petition of Jose M. Roy III, a private lawyer, against SEC Chair Teresita Herbosa, saying she did not commit grave abuse of discretion when she issued  Memorandum Circular (MC) No. 8 Series of 2013.

It warned that the “restrictive re-interpretation of  the term ‘capital’ would result in massive forced divestment of foreign stockholdings in Philippine corporations which was not refuted by the petitioners.”

In its Gamboa decision in 2011, the high court defined capital as referring  only to common shares or stocks entitled to vote in the election of directors and not to the total outstanding capital stock which would include common and nonvoting preferred shares. The high court ruled that the Gamboa decision’s definition of capital has “long become final” and that the SEC was only implementing its earlier ruling.

The decision was based on the complaint filed by assemblyman Wilson Gamboa Sr.  who questioned the sale of PLDT shares owned by Philippine Telephone Investment Corp.  to First Pacific, a foreign firm owned and controlled by the Salim group of Indonesia. Gamboa maintained that this would breach the 40 percent foreign equity limit on public utilities.

The court, however, did not act on the second issue raised by Roy—whether the SEC committed grave abuse of  its discretion in declaring that PLDT was fully compliant with the  40 percent constitutional limitation on foreign ownership.

It said that the SC had not acted on PLDT’s foreign ownership status and  it would be “premature” for the court to make a ruling. It also noted that  PLDT’s foreign ownership issue was a “question of fact best left to the SEC as the court is not a trier of facts.”

The SC voted 8-5  with two abstentions. Those who voted in favor were Chief Justice Ma. Lourdes Sereno and Associate Justices Diosdado  Peralta, Lucas  Bersamin, Mariano  del Castillo, Jose  Perez, Jose  Mendoza, Bienvenido Reyes and Alfred Benjamin  Caguioa.

The dissenters were Associate Justices Antonio Carpio,   Justice Teresita Leonardo-De Castro,  Arturo  Brion, Jose  Mendoza and Marvic Mario Victor  Leonen.

Associate Justice Estela  Perlas-Bernabe was on leave while  Associate Justice  Francis  Jardeleza inhibited.

In June 10, 2013,   Roy, a member of the impeachment defense team of the late Chief Justice Renato Corona, claimed that Herbosa’s MC 8 was “tailor-made to accommodate the scheme of PLDT for conforming with the Constitution.”

The memorandum circular, issued after the Gamboa decision, allowed PLDT to amend its incorporation papers to issue preferred voting shares and sell these stocks to  PLDT Beneficial Trust Fund  Holdings Inc. to comply with the 40-percent ceiling on foreign ownership.

But the high court said the issue was still not ripe for adjudication because Roy’s petition was based on “hypotheticals and were evidently speculative and fraught with conjectures and assumptions.”  It said that any decision would be  merely advisory and not binding.

It also noted that Roy failed to show how he would be injured by the application of MC 8.

The court said  that Roy and other petitioners should have included other public utility companies that would have been affected by the case just like PLDT.

“These corporations ought to have been impleaded so as to be given their day in court as any outcome may result in a deprivation of property without due process,” said the high tribunal.