Lawyer wants annual PLDT stockholders’ meet halted

The Supreme Court building in Manila. INQUIRER FILE PHOTO

MANILA, Philippines—A private lawyer has asked the Supreme Court to stop the Philippine Long Distance Telephone Co. (PLDT) from holding its annual stockholders’ meeting set for June 10, following on an earlier petition he filed questioning before the high tribunal the constitutionality of a Securities and Exchange Commission (SEC) order that he said allowed the telecom giant to skirt the foreign ownership rule in the Constitution.

“…(A)llowing a foreign controlled public utility to conduct stockholders’ meetings, elect directors, appoint officers and enjoy other similar privileges under Philippine law would stand in direct violation of the Constitution,” Jose Roy II said in his May 7 joint consolidated reply with motion for issuance of a temporary restraining order (TRO).

10 days to reply

In a stock exchange filing on Wednesday, PLDT said it had filed a motion with the high court, asking for 10 days to submit a reply and opposition to Roy’s application for a TRO.

The move to stop PLDT’s annual meeting would prevent the company from electing directors “in a manner contrary … to the pronouncements of the Supreme Court,” PLDT said.

In a petition he filed in June 2013, Roy asked the high court to nullify for being unconstitutional a memorandum order issued by the SEC as this allowed the circumvention of the 60-40 percent foreign ownership rule in the Constitution.

Roy, who said he was filing the petition as a lawyer and officer of the court, wanted the high court to ensure that its 2007 decision on the case filed by the late lawyer Wilson Gamboa be implemented properly.

Gamboa suit

Gamboa, a PLDT stockholder, had filed a suit in 2007 questioning the sale of the government’s 111,415 shares of Philippine Telecommunications Investment Corp. (PTIC)—the beneficial owner of the PLDT shares—to First Pacific, a foreign corporation.

In 2011, the high court directed the SEC to investigate whether PLDT had violated the constitutional provision on foreign-ownership limitations.

Under the Constitution, foreigners are not allowed to own more than 40 percent of companies engaged in public utilities such as telecommunications and water distribution firms. Foreign entities are also banned from owning any stake in media companies.

According to Roy’s 2013 petition, a memorandum circular order issued by the SEC, which the regulator had applied in declaring that PLDT was compliant with the constitutional rule on foreign ownership, was unconstitutional

He said the SEC order did not conform to the “letter and spirit” of the high court decision on the Gamboa case where the high tribunal had ruled that the provision capping foreign ownership to 40 percent should be applied separately to all classes of shares.

Circumvented

He said the SEC had avoided applying the 60-40 ownership requirement “separately to each class of shares, whether common, preferred nonvoting, preferred voting or any other class of shares.”

The lawyer said the SEC order encouraged the 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.”

Roy also said the SEC gravely abused its discretion when it ruled that PLDT was compliant with the constitutional rule on foreign ownership.

He also claimed that PLDT violated the foreign ownership rule when it created the Beneficial Trust Fund Holdings Corp. and Mediaquest Holdings Inc. from its own funds, the PLDT Beneficial Trust Fund, so it could participate and invest in a nationalized industry.

Non-Filipino entity

He asked the high court to declare PLDT Beneficial Trust Fund as a non-Filipino entity and that any corporation where it owned more than 60 percent of its outstanding capital stock should also be declared a foreign company.

In his latest petition to the high court, Roy sought for the issuance of a TRO “against the holding of any stockholders meeting by PLDT” as well as its earlier petition.

He said that the issuance of a TRO was “perfectly in keeping with the Gamboa rulings, as the election of directors into office without verifying the nationality of the corporation would deprive Gamboa the benefits of the high court ruling.”—With Miguel R. Camus