THE Supreme Court has directed the Securities and Exchange Commission to determine if Philippine Long Distance Telephone Co. violated the constitutional provision that limits foreign ownership of public utilities to 40 percent.

The order was made during Tuesday’s regular full-court session of the Court, wherein it partly granted the petition filed by Wilson Gamboa, a human-rights lawyer, seeking to annul the sale of the government-acquired 111,415 Philippine Telecommunications Investment Corp. (PTIC) in PLDT shares to Hong Kong-based First Pacific Co. Ltd. worth P25.2 billion.

In their vote, the majority of the justices held 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” composed of “common” or voting shares and “preferred” or nonvoting shares.

The Court also said the SEC has the power to suspend or revoke, after proper notice and hearing, the franchise certificate of registration of corporations, partnerships or associations upon any of the grounds provided by law.

An SEC spokesman declined to comment, saying the regulator has yet to see a copy of the Court order.

In his petition, Gamboa said the sale violated the constitutional limitation on foreign ownership of a public utility; he also said the respondents committed grave abuse of discretion by allowing the sale of PTIC shares to First Pacific.

Gamboa said that as a consequence, First Pacific and NTT DoCoMo, a minority stockholder, would own 51.56 percent of PLDT’s equity, which is over and above the maximum allowable 40 percent under the Constitution.

Gamboa said foreign entities have been breaching the constitutional limitation on foreign ownership of PLDT as early as 2003 and that the foreign ownership of common equity for 2003-2005 hovered at 60 percent.

The petitioner said foreigners could only own up to 40 percent of the voting stocks, which are common shares as defined by the Corporation Code of the Philippines. However, foreign entities can own in excess of the 40-percent cap on common shares, provided such excess would cover nonvoting stocks or preferred shares.

Gamboa said the position of PLDT—that the determination of foreign ownership in a public utility should be based on the combined preferred and common stockholdings of a given public utility—was a misinterpretation of Section 11, Article XII.

The sale of the PTIC shares in PLDT happened after the Supreme Court declared that the shares were part of the ill-gotten wealth of the Marcoses.