SC ruling on PLDT flawed–SEC

By Joel R. San Juan, Business Mirror

Posted at Jul 18 2011 07:23 AM | Updated as of Jul 18 2011 08:21 PM

MANILA, Philippines - Citing “procedural defects” of the Supreme Court ruling, the Securities and Exchange Commission on Sunday asked the High Court to reconsider its decision directing the SEC to determine if Philippine Long Distance Telephone Co. (PLDT) violated the constitutional provision limiting foreign ownership of domestic public utilities to 40%.

In a 13-page motion, the SEC, through the Office of the Solicitor General (OSG), said the High Court’s decision on the petition filed by human-rights lawyer Wilson Gamboa was premature.

It said Gamboa failed to exhaust administrative remedies with the SEC before bringing up the matter to the High Court.

It noted that Gamboa’s petition only cited former SEC Chairman Fe Barin as respondent, instead of the whole SEC.

“Petitioner’s failure to implead the SEC as collegial body prevented the Honorable Court from acquiring jurisdiction over it as a party respondent,” noting making Barin as sole respondent was not sufficient.

“The SEC is a collegial body and cannot discharge its official functions through its individual officers, much less, through an officer who has retired from the government service,” the commission added.

At the same time, however, the SEC said it was not questioning the substantive aspect of the decision, only the procedural defect of the ruling.

Solicitor General Anselmo Cadiz said the government agreed with the SC’s interpretation of Section 11, Article XII of the Constitution. “As the majority opinion succinctly says, In short, the term ‘capital’ in Section 11, Article XII of the Constitution refers only to the shares of stock that can vote in the election of directors,” the OSG said.

Cadiz said Gamboa should have first submitted to the SEC his bid to compel PLDT to make appropriate disclosures relative to its foreign equity and for review of the 40% limit of the company’s ownership before filing a petition before the SC.

“An extraordinary remedy, recourse to this special civil action may be had only in the absence of any plain, speedy, adequate remedy in the ordinary course of law. The rule on the exhaustion of administrative remedies to afford the administrative agency an opportunity to decide a controversy and prevent unnecessary and premature resort to the courts,” Cadiz said.

Gamboa sought to annul the sale of the government-acquired 111,415 Philippine Telecommunications Investment Corp. (PTIC) in PLDT shares to Hong Kong-based First Pacific Co. Ltd. in the amount of P25.2 billion.

He said the sale violated the constitutional limitation on foreign ownership of a public utility and that the SEC committed grave abuse of discretion by allowing the sale of PTIC shares to First Pacific.

In ruling in favor of Gamboa, the Court held that the term “capital” in Section 11, Article XII of the 1987 Constitution referred 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” composed of “common” or voting shares and “preferred” or nonvoting shares.

Thus, the Court said the SEC should look “only to common shares, and not to the total outstanding, capital stock” in the case of PLDT.

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