GR 176579,

GAMBOA V TEVES (Gamboa as the Petitioner, Teves as the Public respondent)

Petitioner: Gamboa
Public Respondents: Teves, Pangilinan

Terms:
PLDT - Philippine Long Distance telephone Company
Wilson Gamboa - petitioner, stockholder of PLDT
Legislature act 3436
GTE - General Telephone & Electronics Corp, american company & major stockholder of PLDT
PHI - Prime Holdings, Inc.
PCGG - Presidential Commission on Good Government

First Pacific - bermuda registered, Hong Kong-based investment firm

IPC - Inter-Agency Privatization Council

Margarito B. Teves - Finance secretary

John P. Sevilla - Undersecretary
Ricardo Abcede - PCGG Commissioner

HR - House of Representatives

Facts according to Gamboa:

On Nov 28, 1928, PLDT was granted a franchise and the right to engage in telecom business by the
Philippine legislature act 3436.
In 1969, GTE sold 26% of outstanding shares of PLDT to PITC.
In 1977, PHI was incorporated by Roland Gapud, and Jose Campos, Jr. and became the owner of
111,415 shares of stock of PTIC by virtue of 3 Deeds of assignment executed by PTIC stockholders
Ramon Cojuangco & Luis Tirso Rivilla.
In 1986, PTIC’s 111,415 shares were sequestered by the PCGG.
The said shares totaling 46.125% of the outstanding capital of PTIC were later declared by the court
to be owned by the Republic of the Philippines.

In 1999, First Pacific acquired the remaining 54% of the outstanding capital of PTIC.
In Nov 2006, IPC of the Ph Government announced selling of the 111,415 shares through public
bidding on Dec 4 2006, adjusted to dec 8, won by Parallax with a bid of 25.6 Billion or 10M dollars.
First Pacific announced their right of refusal buying the same price bid of Parallax, however they
failed to do so at the deadline, Feb 1, 2007 but refers to the right to PTIC itself and adjusted until
March 2, 2007.

MPAH entered a Conditional Sale and Purchase Agreement of the 111,415 shares through First
Pacific’s subsidiary, with the Ph Government for the price of 25,217,556,000 or 510,580,189 US
Dollars and was completed on Feb 28, 2007. The sale of the said shares were considered as an
indirect sale of 12 million shares or about 6.3 percent of the outstanding common shares of PLDT.
Upon sale, First Pacific’s common shareholdings in PLDT jumped from 30.7% to 37%, also the
foreigners common shareholdings increased to about 81.47% which violates the Section 11, Article
12 of the 1987 Philippine Constitution that limits foreign ownership of the capital of a public utility to
not more than 40%.

Alleged Facts according to the public respondents:

On Nov 9, 1967, PTIC was incorporated and had engaged in the business of investment holdings.
PTIC held 26,034,263 PLDT common shares or 13.847% of PLDT’s total outstanding common
shares. While PHI was incorporated in 1977 and became the owner of the said 111,415 shares of
PTIC or 46.125% of PTIC’s outstanding capital stock by virtue of 3 Deeds as assignment executed
by Ramon Cojuangco and Luis Tirso Rivilla.
1n 1986, the mentioned shares held by PHI were sequestered by PCGG and declared by the court
as part of the ill-gotten wealth of former President Ferdinand Marcos. The sequestered shares were
reconveyed to the Republic of the Philippines in accordance with the final decision of the court on
August 8, 2006.

The Ph Government decided to sell the PTIC shares representing 6.4% of the outstanding common
shares of stock of PLDT, designating IPC composed of the Department of Finance and the PCGG
as the disposing entity. Bid invitations were published in 7 different newspapers from Nov 13-24
2006 and on Nov 20, a pre-bid conference was held and the original deadline of it was Dec 4 and
then further adjusted to Dec 8, 2006 which was also published in 9 different newspapers.

During the Dec 8 2006 bidding, Parallax won the bid with 25,217,556,000 pesos. The government
notified First Pacific of the bidding results, giving them until Feb 1 2007 to exercise their right of
refusal in accordance with PTIC’s articles of Incorporation and announce their intention to match
Parallax’s bid.

—-
The HR Committee on Good Government conducted a public hearing attended by the respondents
Teves and Sevilla on the particulars of the sale of the 11,415 shares. The HR Committee Report no.
2270 concluded that
a) The auction of the government’s 11,415 shares bore due diligence, transparency and
conformity with existing legal procedures
b) First Pacific’s acquisition of the government’s 111,415 PTIC shares that resulted in the 100%
ownership of PTIC will not violate the limitation of the foreign ownership of a public utility
since PTIC only holds 13.847% of the total outstanding common shares of PLDT. First
Pacific completed the acquisition of the 111,415 shares of stock of PTIC.

Manuel V. Pangilinan admitted the following:

a) The IPC conducted a public bidding for the sale of the aforementioned sales and saying the
remaining 54% of PTIC shares were already owned by the First Pacific and its affiliates
b) Parallax offered the highest bid of 25,217,556,000
 c) Notified the right of first refusal of PTIC and its shareholders granted in their Articles of Inc,
MPAH, an affiliate of First Pacific, exercised its right of first refusal by matching the highest
bid for the shares on Feb 13, 2007
d) On Feb 28, 2007, the sale was consummated when MPAH paid IPC 25,217,556,000 and the
government delivered the certificates for the said shares.
e) Pangilinan denies the other allegations of the petitioner.

On Feb 28, 2007, petitioner filed the instant petition for prohibition, injunction, declaratory relief and
declaration of nullity of sale of the shares. Petitioner claims that the sale of the shares would result in
an increase in First Pacific’s common shareholdings in PLDT from 30.7% to 37% combined with
Japanese NTT DoCoMo’s common shareholdings in PLDT would result to a total foreign common
shareholdings in PLDT of 51% which is over the 40% constitutional limit.

If the sale is completed, First Pacific's equity in PLDT will go up from 30.7% of its common - or -
voting - stockholdings. Hence, the consummation