JOSE M. ROY III v. CHAIRPERSON TERESITA HERBOSA, GR No. 207246, 2016-11-22
Facts:
On June 28, 2011, the Court issued the Gamboa Decision,… that the term “capital” in Section 11, Article
XII of the 1987 Constitution refers 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
(common and non-voting preferred shares).
The Gamboa Decision attained finality on October 18, 2012, and Entry of Judgment was thereafter
issued on December 11, 2012
On May 20, 2013, the SEC, through respondent Chairperson Teresita J. Herbosa, issued SEC-MC No. 8
Section 2. All covered corporations shall, at all times, observe the constitutional or statutory ownership
requirement. For purposes of determining compliance therewith, the required percentage of Filipino
ownership shall be applied to BOTH (a) the total number of outstanding shares of stock entitled to vote
in the election of directors; AND (b) the total number of outstanding shares of stock, whether or not
entitled to vote in the election of directors.
On June 10, 2013, petitioner Roy, as a lawyer and taxpayer, filed the Petition,[15] assailing the validity of
SEC-MC No. 8 for not conforming to the letter and spirit of the Gamboa Decision and Resolution and for
having been issued by the SEC with grave abuse of discretion.
Issues:
Whether the SEC gravely abused its discretion in issuing SEC-MC No. 8 in light of the Gamboa Decision
and Gamboa Resolution
Ruling:
SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it issued
SEC­-MC No. 8. To the contrary, the Court finds SEC-MC No. 8 to have been issued in fealty to the
Gamboa Decision and Resolution.
Gamboa Decision
“capital” in Section II, Article XII of the I987 Constitution refers 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 (common and non-voting preferred shares).
The Gamboa Resolution
Foreign Investments Act of 1991 (“FIA”)
Gamboa Resolution put to rest the Court’s interpretation of the term “capital”
Full beneficial ownership of stocks, coupled with appropriate voting rights is essential… reiterates and
confirms the interpretation that the term “capital” in Section 11, Article XII of the 1987 Constitution
refers to shares with voting rights, as well as with full beneficial ownership.
Section 2 of SEC-MC No. 8 clearly incorporates the Voting Control Test or the controlling interest
requirement. In fact, Section 2 goes beyond requiring a 60-40 ratio in favor of Filipino nationals in the
voting stocks; it moreover requires the 60-40 percentage ownership in the total number of outstanding
shares of stock, whether voting or not. The SEC formulated SEC-MC No. 8 to adhere to the Court’s
unambiguous pronouncement that “[f]ull beneficial ownership of 60 percent of the outstanding capital
stock, coupled with 60 percent of the voting rights is required.”[79] Clearly, SEC-MC No. 8 cannot be said
to have been issued with grave abuse of discretion
While SEC-MC No. 8 does not expressly mention the Beneficial Ownership Test or full beneficial
ownership of stocks requirement in the FIA, this will not, as it does not, render it invalid meaning, it does
not follow that the SEC will not apply this test in determining whether the shares claimed to be owned
by Philippine nationals are Filipino, i.e., are held by them by mere title or in full beneficial ownership. To
be sure, the SEC takes its guiding lights also from the FIA and its implementing rules, the Securities
Regulation Code