SC affirms ruling in favor of SEC’s 60-40 foreign ownership rule

MANILA, Philippines – The Supreme Court (SC) has affirmed its earlier decision denying a petition that questioned how the Securities and Exchange Commission (SEC) implements its 60-40 foreign ownership rule in a case involving PLDT Incorporated.

“The Court maintained its 8-5 voting against the petition filed by lawyer Jose Roy III, said SC spokesman Theodore Te in a press briefing on Tuesday, April 18. (READ: Supreme Court upholds SEC foreign ownership rules)

The upheld ruling, which was released in December 2016, stemmed from Roy’s allegations that the foreign ownership guidelines set by the SEC in 2013 was “tailor-made” to allow PLDT to skirt the law limiting foreign ownership in public utilities to 40%.  

The guidelines in question were propagated in SEC Memorandum Circular 8, series of 2013 (MC Number 8), otherwise known as “Guidelines on Compliance with the Filipino-Foreign Ownership Requirements.”

No new arguments

In denying Roy’s motion for reconsideration, the SC noted that the petitioner failed to raise new arguments that would warrant the reversal of its decision.

“The Court voting 8-5, denied petitioner’s motion for reconsideration of the Court’s November 22, 2016, decision (which denied the petition and the petition in intervention) for not having raised any substantially new grounds to warrant a reconsideration,” the SC ruled.

Roy originally questioned the constitutionality of the SEC memorandum for not conforming to the spirit and letter of the following: the High Court’s decision in the case of Gamboa v. Teves promulgated on June 28, 2011; and the SC’s resolution on the motions for reconsideration issued on October 9, 2012, regarding the limit to foreign ownership under the Constitution.

The 2012 court ruling stated that the 60-40 ownership requirement in favor of Filipino citizens should apply separately to each class of shares.

In the Gamboa decision, the SC 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 High Court directed the SEC to apply this definition of the term “capital” in determining the extent of allowable foreign ownership in the case of PLDT, and to impose appropriate sanctions if there was a violation of Section 11, Article XII, of the Constitution.

The court, however, held that there was no abuse of discretion on the part of the SEC as it was simply implementing the Gamboa Decision and the Gamboa Resolution. – Rappler.com