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

The case originated from the final and executory 2011 Gamboa v. Teves Decision, which interpreted the term “capital” in the constitutional provision on foreign ownership of public utilities (Sec. 11, Art. XII). The Court ruled that “capital” refers 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. In 2013, the SEC issued Memorandum Circular No. 8 (SEC-MC No. 8), providing guidelines for compliance. Section 2 of the circular stated that the required Filipino ownership must be applied to BOTH (a) the total number of outstanding voting shares, AND (b) the total number of outstanding shares, whether voting or non-voting.
Petitioner Jose M. Roy III, joined by intervenors led by Wilson Gamboa Jr., filed a special civil action for certiorari to annul SEC-MC No. 8. They argued the circular contravened the Gamboa Decision by imposing a “two-tier” test (applying the 60-40 ratio to both the voting stock and the total outstanding capital stock) instead of applying the ratio only to voting shares. They contended this was a grave abuse of discretion, effectively reinterpreting and expanding the Court’s final ruling, and sought a declaration that PLDT was non-compliant.

ISSUE

Whether the SEC committed grave abuse of discretion in issuing SEC-MC No. 8 for allegedly violating the final and executory Gamboa v. Teves Decision.

RULING

The Court DISMISSED the petitions. The SEC did not commit grave abuse of discretion. The Gamboa Decision definitively ruled that the term “capital” refers to shares with voting rights. SEC-MC No. 8’s two-tier test was a valid implementation, not a violation, of this ruling. The first tier (applying the ratio to voting shares) directly implements Gamboa‘s definition. The second tier (applying it to total outstanding shares) is a separate, additional control mechanism to ensure beneficial ownership rests in Filipino hands, preventing circumvention through non-voting but equity-rich share classes. This does not alter or overrule Gamboa but operationalizes it within the SEC’s mandate.
The Court emphasized that Gamboa was final and executory; its interpretation of “capital” is immutable. A writ of certiorari under Rule 65 cannot be used to re-litigate or seek a reinterpretation of a final judgment. The petitioners’ substantive arguments, which essentially sought a new ruling that the 60-40 ratio must be applied separately to each class of shares, constituted a prohibited second motion for reconsideration of the Gamboa doctrine. The SEC acted within its quasi-legislative authority to promulgate reasonable rules to enforce a constitutional mandate, and its interpretation in the circular was a permissible exercise of that discretion.