And I’m not the nerdy type either, although I'm a geek most of the time co'z I'm a little bit techie and internet savvy, but I got my share of bad grades as well. I procrastinate relying on my push-comes-to-shove 'mutant' learning abilities, I only study during exams, and I’m an excellent crammer. Like it all ferociously crumple up inside my head in so short a time and sort of automatically downloads it self when I need it, only inevitably some in disarray. I’m not the studious type even. Although I could read a book in one sitting, if the facts interests me. And it’s only just this year after so many years of having 20/20 vision that the doctors slid a pair of glasses on me and they never even were thick glasses but just take-off-in-a-normal-day reading glasses. I'm far-sited. So, don't feel intimidated okay? Who knows, we might be after all kindred spirits.
Truth is I should’ve taken the bar what 5 or 6 years ago? So in a bird's eye-view technically that would make me certified failure. I should’ve been done with this sooner had I come to my senses earlier when I was a bit not older that this is really what I wanted. And right now I feel like I’m slowly inching, dragging towards the finish line like a boring itchy worm. I hope I get there somehow, or at least. And who knows come to think of it, chances are you might be someone that's actually better than me, in so many ways than one when we actually get there. Oh do we digress? :) Sorry. Alright here it goes.
This is a CORPO case. Corpo meaning corporation. It is also somehow tackled in Transportation Law when it comes to discussing the foreign ownership issue of a public utility. The law particularly invoked in this case is Sec. 11 of Art. 12 of the 1987 Constitution, which provides the limitation of foreign ownership of capital stocks to not more than 40%.
The exact provision states:
Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens;..
So meaning.. adhering to this well settled principle, the remaining 40% may be foreign owned. This is ah... the bone of contention here is the word "CAPITAL" in this constitutional provision.
The action in this corporate drama started when above petitioner Wilson Gamboa, a Filipino PLDT stockholder filed a petition to nullify the sale of shares of stocks of PTIC, (that's Philippine Telecommunications Investment Corporation) by the government, who effected the sale through IPC, (the Inter-Agency Privatization Council.) The transfer of the ownership of the shares was done through a conditional sale via a public bidding. And the sale was awarded to MPAH, (Metro Pacific Assets Holdings, Inc.), an affiliate of First Pacific Company Limited (First Pacific), which is a Hong Kong-based investment management and holding company. In other words, were talking about a foreign company purchaser here.
Let me give you a rundown on the history of this case so you can understand it fully:
In (1928) : The Philippine legislature enacted Legislative Act No. 3436 which granted PLDT franchise and the right to engage in telecommunication business alright? (grabe buhay na pala PLDT noon? pano sila nagcocommunicate? dalawang lata na may tale?... oh well I guess its understandable, the brilliant dude Alex Graham Bell invented the telephone in around 1876? The invention must have probably evolved when it reached Philippine soil, although I just wonder if our predecessors were able to utilize the earliest model, the one that you stuck this thing in your ear and the other one in your mouth and say 'greetings!' Lol)
Alright, in (1969): GTE (not the VW GTE hybrid car ah) General Telephone Electronics, (the one that merged with Bell Atlantic. GTE is the parent company that spearheaded subsidiaries like Verizon and the Canadian company Telus? Yeah like the BPO outsourcing company.. you know that building you see across the Araneta Coliseum?) GTE is an American firm and during that time was one of the major PLDT stockholders. So what happened was it sold the 26% of its Outstanding Common Shares to PTIC. Outstanding Common Shares, meaning were talking about the whole shares of stocks of PLDT okay?. (Parang... kase the whole PLDT shares wasn't owned individually but severally like most of the stocks right? Like a conglomerate.) And the 26% OComS which was owned by the Americans was sold to a Filipino company which is PTIC, (Philippine Telecommunications Investment Corporation, which I think was majorly owned by the Cojuancos.)
Now in (1977): PHI (Prime Holdings Inc. ) was incorporated which I think was surreptitiously created since it subsequently became owner of 111 thousand shares of PTIC by virtue of a Deed of Assignment executed by PTIC then stockholder Ramon Cojuanco. (I think this was during the time of Marcos when a lot of clandestine transfer of ownership were being effected, but of course the anti-Marcoses saw all that).
So in (1986): after the EDSA Revolution. The PCGG was created and it sequestered this 111 Thousand shares which was later declared by court as government owned. The 111 Thousand shares by the way comprises 46% of the Outstanding Capital Stock of PTIC. OCapS meaning like were talking about Total Capital Shares of Stocks meaning may be owned within the individual shares of companies that comprised the PLDT stockholder companies. Gets? Now here comes the foreign company that started the issue entering the picture..
In (1999): First Pacific a Hong Kong based investment management and holding company acquired the remaining 54% Outstanding Capital Stocks of PTIC... so were talking about OCapS here alright? as opposed to OComS. This acquisition simply means a foreign company had just bought himself in and became a player as one of the stockholders of PLDT through PTIC stocks. Crystal?
Now (2006): We now all know that 46% of OCapS of PTIC is now government owned right? PCGG sequestered the assets remember? Now, the government wanted to dispose these shares in order to privatize it, so through the IPC (Inter-Agency Privatization Council) it announced a public bidding where thereafter only 2 bidders submitted a bid. Parallax Ventures and PAN ASIA. Parallax won with a bid of P25 Billion.
Now watch out here comes that foreign company First Pacific once again. As a PLDT stockholder and one of the stock players, it entered the picture once again eyeing that remaining 46% PTIC shares... in other words foreign owned First Pacific wanted to own PTIC by 100% alright? So what it did was it announced that it will exercise its Right of First Refusal as a PTIC stockholder (it has a right because it owned the 54% PTIC shares of stocks remember?) and it offered to buy the remaining 46% by matching the bid price of Parallax.
But in (2007): First Pacific failed to do so and therefore not complying with the deadline. So it was opted out by the government seller. But since the company was insistent First Pacific thru its subsidiary company MPAH entered into a conditional sale with the government and purchased the 46% for P25 Billion which resulted to an increase of First Pacific's stock ownership, rendering PTIC as wholly foreign owned. (Kaya pag magtatayo ka ng kompanya, magtayo ka ng subsidiary di ba? or affiliates through acquired assets.. to do the dirty work :))
Now this is primarily the reason for this petition. PLDT stock holder Wilson Gamboa saw all that and he now questions the sale between the government and MPAH (First Pacific) alleging that the sale resulted to an Indirect Sale which violated the 40% foreign capital ownership limitation of Sec. 11 of Art. 12 of the 1987 Constitutional provision.
Finance Secretary Margarito Teves who was the prime respondent in this case together with the then PCGG Commissioner Abcede defended the sale and alleged that First Pacific's intended acquisition of government's 111 Thousand PTIC shares resulting in 100% ownership of PTIC WILL NOT VIOLATE the 40% constitutional limit on foreign ownership of public utility since PTIC holds only 13% of the total OUTSTANDING COMMON SHARES of PLDT. (OComS remember?)
ISSUE:
Whether the term CAPITAL in Sec. 11 Art. 12 of Consti refer to the total common shares only, or to the total outstanding capital stocks of PLDT.
RULING:
The petition is PARTLY MERITORIOUS.
The Court said that it is not a trier of facts. That factual questions raised by petitioner are generally beyond the court jurisdiction. So adhering to this well settled principle. the court said it will confine its resolution solely on the threshold of purely legal matter on the interpretation of the term 'CAPITAL'. So it was a question of law after all. (After all the hoopla and bombardization of facts Lol.)
The Court partly granted the petition and held that the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock entitled to vote in the election of directors of a public utility, i.e., to the total common shares in PLDT.
Considering that common shares have voting rights which translate to control, as opposed to preferred shares which usually have no voting rights, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to common shares.
However, if the preferred shares also have the right to vote in the election of directors, then the term “capital” shall include such preferred shares because the right to participate in the control or management of the corporation is exercised through the right to vote in the election of directors. In short, the term “capital” in Sec. 11, Art. 12 of the Constitution refers only to shares of stock that can vote in the election of directors.
