PLDT issues new shares to comply with SC rule

After the SC has finally
decided the case on the PLDT about the 60-40, palagay ko dapat managot ang PLDT
at SEC sa ginawa nilang interpretasyun at pangungurakot sa mga preferred share
holders for so many years.  

At dahil dito, naiisip ko
bakit inilagay ni Gloria ang pera ng cocol levy sa preferred shares? Agrabyado
yata sa ginawang ito ang pera ng coco farmers.

Well, anyhow, sabi duon sa
SC decision (na 66 pages) on June 28, 2011:

“In
short, only holders of common shares can vote in the election of directors,
meaning only common shareholders exercise control over PLDT. Conversely,
holders of preferred shares, who have no voting rights in the election of
directors, do not have any control over PLDT. 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.

It must be
stressed, and respondents do not dispute, that foreigners hold a
majority of the common shares of PLDT. In fact, based on PLDT’s 2010 General
Information Sheet (GIS),[54] which is
a document required to be submitted annually to the Securities and Exchange
Commission,[55] foreigners hold
120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622 common
shares.[56] In other words,
foreigners hold 64.27% of the total number of PLDT’s common shares, while
Filipinos hold only 35.73%. Since holding a majority of the common shares
equates to control, it is clear that foreigners exercise control over PLDT.
Such amount of control unmistakably exceeds the allowable 40 percent limit on
foreign ownership of public utilities expressly mandated in Section 11, Article
XII of the Constitution.

Moreover, the
Dividend Declarations of PLDT for 2009,[57]
as submitted to the SEC, shows that per share the SIP[58] preferred shares earn a pittance in
dividends compared to the common shares. PLDT declared dividends for the common
shares at P70.00 per share, while the declared dividends for the preferred
shares amounted to a measly P1.00 per share.[59]
So the preferred shares not only cannot vote in the election of directors, they
also have very little and obviously negligible dividend earning capacity
compared to common shares.

As shown in
PLDT’s 2010 GIS,[60] as submitted to
the SEC, the par value of PLDT common shares is P5.00 per share, whereas the
par value of preferred shares is P10.00 per share. In other words, preferred
shares have twice the par value of common shares but cannot elect directors and
have only 1/70 of the dividends of common shares. Moreover, 99.44% of the preferred
shares are owned by Filipinos while foreigners own only a minuscule 0.56% of
the preferred shares.[61] Worse,
preferred shares constitute 77.85% of the authorized capital stock of PLDT
while common shares constitute only 22.15%.[62]
This undeniably shows that beneficial interest in PLDT is not with the
non-voting preferred shares but with the common shares, blatantly violating the
constitutional requirement of 60 percent Filipino control and Filipino
beneficial ownership in a public utility.

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. 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.

In short,
Filipinos hold less than 60 percent of the voting stock, and earn less than 60
percent of the dividends, of PLDT. This directly contravenes the express
command in Section 11, Article XII of the Constitution that “[n]o
franchise, certificate, or any other form of authorization for the operation of
a public utility shall be granted except to x x x corporations x x x organized
under the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens x x x.”

To repeat, (1)
foreigners own 64.27% of the common shares of PLDT, which class of shares
exercises the sole right to vote in the election of directors, and thus
exercise control over PLDT; (2) Filipinos own only 35.73% of PLDT’s common
shares, constituting a minority of the voting stock, and thus do not exercise
control over PLDT; (3) preferred shares, 99.44% owned by Filipinos, have no
voting rights; (4) preferred shares earn only 1/70 of the dividends that common
shares earn;[63] (5) preferred shares
have twice the par value of common shares; and (6) preferred shares constitute
77.85% of the authorized capital stock of PLDT and common shares only 22.15%.
This kind of ownership and control of a public utility is a mockery of the
Constitution.

Incidentally,
the fact that PLDT common shares with a par value of P5.00 have a current stock
market value of P2,328.00 per share,[64]
while PLDT preferred shares with a par value of P10.00 per share have a current
stock market value ranging from only P10.92 to P11.06 per share,[65] is a glaring confirmation by the market
that control and beneficial ownership of PLDT rest with the common shares, not
with the preferred shares.

Indisputably,
construing the term “capital” in Section 11, Article XII of the
Constitution to include both voting and non-voting shares will result in the
abject surrender of our telecommunications industry to foreigners, amounting to
a clear abdication of the State’s constitutional duty to limit control of
public utilities to Filipino citizens. Such an interpretation certainly runs
counter to the constitutional provision reserving certain areas of investment to
Filipino citizens, such as the exploitation of natural resources as well as the
ownership of land, educational institutions and advertising businesses.”

__________________________________

At sabi pa sa
bandang huli ng SC disisyun:

WHEREFORE, we (Leonardo-De
Castro, Brion, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza,
and Sereno, JJ.), PARTLY GRANT the petition and rule that the
term “capital” in Section 11, Article XII of the 1987 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 (common and non-voting preferred shares). Respondent
Chairperson of the Securities and Exchange Commission is DIRECTED to
apply this definition of the term “capital” in determining the extent
of allowable foreign ownership in respondent Philippine Long Distance Telephone
Company, and if there is a violation of Section 11, Article XII of the
Constitution, to impose the appropriate sanctions under the law.

SO ORDERED.

Corona, C.J., Join the dissent of J.
Velasco.
Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Villarama, Jr.,
Perez, Mendoza, and Sereno, JJ., concur.
Velasco, Jr., J., I dissent. (please see dissenting opinion.)

Bumayo parin
na naman dito ang partners-in-xxx ni Corona, sila Velasco
at Abad for dissenting.

Binasa ko ang
dissenting opinion ni Velasco – walang wawa, parang butas na baldi, uma-amoy sa
baho, daig pa ang panis na gurami.

Nevertheless, binigyan pa ng SC ng diin na:

” . . . if there is a violation of Section 11,
Article XII of the Constitution, to impose the appropriate sanctions under the
law.”

Anong appropriate actions eh ang SEC nga ang korapt
dito dahil pinabayaan nila ng ganyan from the start.

Ganuonpaman, ang tanong ko, do you think kayang
gawin ng SEC na hatawin ang PLDT ng violation na sa leeg ang tama? Mga baboy
ang mga nasa SEC particularly the heads around the case. They don’t have souls
to help the PH people. Dapat dyan sa kanila ay linisin at lagyan ng mga ibang
tao – mga buwisitttttt.

Meron kayang Pangilinan in connivance with SEC dito?