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SC junks petition on foreign ownership of PLDT
MANILA, Philippines – The Supreme Court (SC) has junked another petition questioning the foreign ownership in telecommunications giant Philippine Long Distance Telephone Co. (PLDT).
Voting 8-5 in a decision released yesterday, the high court dismissed the 2013 petition of lawyer Jose Judd Roy III contesting the implementation by the Securities and Exchange Commission (SEC) of an SC ruling in June 2011 imposing the 40-percent limit to foreign ownership in PLDT.
The high tribunal held that the assailed SEC Memorandum Circular No. 8 is consistent with the 2011 ruling that only Filipinos should effectively control a public utility firm like PLDT.
“The Court found that the SEC did not gravely abuse its discretion as it was simply implementing the Gamboa Decision and the Gamboa Resolution (2011 and 2012 ruling). The Court reviewed the Gamboa Decision and Resolution and reiterated that both defined ‘capital’ broadly but only to apply to shares of stock that can vote in the election of directors and that MC No. 8 simply implemented and is, thus, fully in accordance with Gamboa,” read the ruling penned by Associate Justice Alfredo Benjamin Caguioa.
The SC, however, dismissed the second issue in Roy’s petition on whether the SEC has gravely abused its discretion in ruling that PLDT is compliant with the constitutional cap on foreign ownership.
“The Court found that the SEC had yet to make a definitive ruling on PLDT’s compliance with the capital requirement pursuant to the Gamboa decision and the Gamboa resolution, thus any ruling would be premature,” it stressed.
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“Also, the Court cited that the determination of PLDT’s compliance with the capital requirement is a question of fact best left to the SEC as the court is not a trier of facts,” the high court held.
In his petition, Roy asked the high court to declare SEC’s order as unconstitutional for being an erroneous interpretation of the SC ruling on the limit to foreign ownership under Article XII, Section 11 of the Constitution.
The SEC order states: “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 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.”
In its 2011 ruling on the petition of the late human rights lawyer Wilson Gamboa, the high court held that the term “capital” in Article XII, Section 11 of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors or the so-called common shares and not to the total outstanding, capital stock composed of “common” or voting shares and “preferred” or non-voting shares.
The SC ruling also directed the SEC to apply this definition of the term “capital” in determining the extent of allowable foreign ownership in PLDT and if there is violation of Article XII, Section 11 of the Constitution.