G.R. No. 207246 , November 22, 2016
JOSE M. ROY III, PETITIONER, VS. CHAIRPERSON TERESITA HERBOSA, THE SECURITIES AND EXCHANGE COMMISSION, AND PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, RESPONDENTS.

FACTS

This case originated from the Court’s 2011 ruling in Gamboa v. Teves, which defined the term “capital” in the constitutional provision on foreign ownership of public utilities (Section 11, Article XII) as referring only to shares entitled to vote in the election of directors, i.e., common shares. The Securities and Exchange Commission (SEC) was directed to apply this definition. Subsequently, the SEC, after public consultation, issued Memorandum Circular No. 8 in 2013. Section 2 of the MC required covered corporations to apply the Filipino ownership requirement to BOTH (a) the total number of outstanding voting shares, AND (b) the total number of outstanding shares of any type.
Petitioner Jose Roy III assailed MC No. 8 via a petition for certiorari, alleging it constituted grave abuse of discretion for not being in accord with Gamboa. He argued the circular failed to mandate that the 60-40 ownership requirement be applied separately to each class of shares, as suggested by a line in a subsequent Gamboa resolution. He sought a declaration of unconstitutionality and new guidelines. Petitioners-in-intervention, including Wilson Gamboa Jr., joined the challenge, also contesting PLDT’s compliance.

ISSUE

Whether the SEC committed grave abuse of discretion in issuing Memorandum Circular No. 8.

RULING

The Court, through the concurring opinion of Justice Velasco Jr., voted to dismiss the petition. The legal logic centered on the petitioner’s failure to satisfy the stringent requisites for the exercise of judicial review, particularly the requirement of legal standing. For a petitioner to challenge the constitutionality of a governmental act, they must demonstrate a direct and personal injury resulting from the act. Petitioner Roy merely claimed his law firm was “a subscriber of PLDT,” without clarifying if this referred to share subscription or service subscription. This vague allegation was insufficient to prove any direct, personal injury he would sustain from the SEC’s issuance of MC No. 8.
The opinion further reasoned that the petition presented a premature constitutional question. The proper recourse for a shareholder questioning corporate compliance with nationality rules is a derivative suit, not a direct challenge to an administrative guideline. Since the petitioner failed to establish standing and the issue was not ripe for judicial review, the Court could not proceed to substantively rule on the alleged conflict between MC No. 8 and the Gamboa decision. The petition was thus dismissed for failing to meet the threshold procedural requirements for judicial review.