SC upholds SEC foreign ownership guidelines

BAGUIO CITY – The Supreme Court upheld its 2016 decision that dismisses a petition questioning the Securities and Exchange Commission (SEC) guidelines on foreign ownership cap with respect to the Philippine Long Distance Telephone Company (PLDT.

Voting 8-5, the high court denied the motion for reconsideration filed by private lawyer Jose M. Roy III against SEC Chair Teresita Herbosa.

The high court said Roy failed to raise new issues that would warrant a reversal of their earlier ruling.

“The Court denied petitioners’ motion for reconsideration for not having raised any substantially new grounds to warrant a reconsideration,” the high court said in a ruling released Tuesday.

In its ruling last year, the high court, through Associate Justice Alfredo Benjamin Caguioa, affirmed the validity of SEC Memorandum Circular No. 8, Series of 2013 or Guidelines on Compliance with the Filipino-Foreign Ownership Requirements Prescribed in the Constitution and/or Existing Laws by Corporations Engaged in Nationalized and Partly Nationalized Activities.

In its petition, Roy questioned the constitutionality  of the memorandum for not conforming to the spirit and letter of the Court’s decision in the case of Gamboa v. Teves  promulgated on June 28, 2011 and its Resolution on the motions for reconsideration issued on October 9, 2012  on the limit to foreign ownership under Section 11, Article XII of the Constitution.

The petitioner argued that SEC abused its discretion in issuing MC No. 8 wherein it omitted the uniform and separate application of the 60:40 rule in favor of Filipinos to each and every class of shares of a corporation.

It added that SEC erred when it held that the constitutional prohibition has been complied with specifically as far as Philippine Long Distance Telephone Company  is concerned.

Roy said it was clear based on the SC ruling that the 60-40 ownership limit must differentiate the classes of shares.

However, the petitioner said SEC’s memorandum Circular to make a distinction between different classes of shares, and instead offers only a general distinction between voting and all other shares.

In the Gamboa decision, the Court held that  the “capital” requirement in Article XII, Section 11 of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors.

The Court directed SEC  to apply this definition of the term “capital” in determining the extent of allowable foreign ownership in the case of PLDT and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law.

The Court, however, held that there was no abuse of discretion on the part as it was simply implementing the Gamboa Decision and the Gamboa Resolution.

The same 2016 ruling, however, has not acted on another 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.”