Jose Elpidio O. Isip vs. Philippine Long Distance Telephone Company

[SEC CASE NO. 3194. July 15, 1987.] JOSE ELPIDIO O. ISIP , petitioner , vs . PHILIPPINE LONG DISTANCE TELEPHONE COMPANY , respondent . O R D E R This is a resolution of petitioner's application for preliminary injunction "enjoining respondent PLDT's Board of Directors from proceeding with and taking up the matter of the increase of Serial Preferred Stock pursuant to the Subscribers Investment Program under P.D. No. 217 (Agenda No. 1) in the Stockholders' Special Meeting of July 15, 1987" and, after due hearing, to make said "Provisional Order" permanent. In support of the said prayer, petitioner alleged that respondent's Board of Directors has called for a special meeting of PLDT's stockholders on July 15, 1987 to consider and vote on the proposed amendment of PLDT's Articles of Incorporation for the increase of the authorized capital stock of the company from P2.7 Billion to P4.5 Billion by increasing the number of shares of Serial Preferred Stock of the par value of P10 each which the company is authorized to issue from 203 million shares to 383 million shares. According to petitioner, the proposed amendment "is pursuant to the Subscribers Investment Program of PLDT under P.D. No. 217" (Petition, par. 4). He then concluded that since "the Presidential Commission on Good Government (PCGG) resolved to lift the sequestration of PLDT subject to the condition, among others, that the latter shall submit feasible plans for the abrogation of the current requirement that telephone applicants become subscribers to the company's shares of stock" (Petition, par. 5) then the proposed amendment for the increase of PLDT's Serial Preferred Stock is "ultra vires" (Par. 7) and consequently, should be enjoined. Pursuant to the Order of this Commission dated July 3, 1987, respondent filed an answer-opposition, dated July 8, 1987, in which it specifically denied that the proposed amendment of its Articles of Incorporation for the increase of its Serial Preferred Stock is intended for or pursuant to its SIP Program under P.D. No. 217. It insisted that the said proposal "is predicated and/or is based exclusively and entirely on its corporate power and capacity to amend its Articles of Incorporation and By-Laws consistently with the grant to it of such power and prerogative by Section 38 of the New Corporation Code of the Philippines, Batas Pambansa Bilang 68" (par. 3, p. 4, Answer-Opposition dated July 8, 1987). Moreover, respondent PLDT claimed that the said proposal was intended merely to meet part of the financing requirements of PLDT's continuing service improvement and expansion program. Lastly, respondent raised in issue petitioner's "right, interest, personality, and/or concern" to speak or sue for the PCGG considering that he "is neither an officer, agent, representative nor authorized spokesman" of the said Commission. The Petition was heard on July 8, 1987 at which both parties merely reiterated their respective positions stated in their aforementioned pleadings. IEDaAc After a careful analysis of the facts of this case as reflected in the pleadings, as well as the documentary evidence presented by petitioner, the respondent having submitted its answer-opposition without any evidence thereto, the Commission finds no sufficient evidence to support petitioner's claim that the proposed amendment of respondent's Articles of Incorporation to increase its Serial Preferred Stock from 203 million to 383 million shares is pursuant to PLDT's SIP Program under P.D. No. 217. On the contrary, by petitioner's own admission at the hearing of July 8, 1987, his contention was premised on the context of the Notice of Special Stockholders Meeting issued by PLDT, to wit: "(1) To consider and act upon a recommendation of the Board of Directors, subject to the approval of the National Telecommunications Commission, to amend Article Seventh of the Company's Articles of Incorporation to increase the authorized capital stock of the Company from P2,700,000,000.00 to P4,500,000,000.00 by increasing the number of shares of Serial Preferred Stock of the par value of P10 each which the company is authorized to issue from 230,000,000 shares to 383,000,000 shares." Petitioner argued that the statement in the aforequoted notice that the proposed amendment would be submitted to the NTC for its approval was in itself evidence that the same was related or pursuant to its SIP Program under P.D. No. 217. He contended that otherwise, the said amendment did not need to be approved by the NTC. Petitioner's argument is devoid of merit. To begin with, Section 20 (e) of the Public Service Act specifically requires the approval by the National Telecommunications Commission of the proposed amendment in question. Moreover, the records of this Commission clearly show that respondent PLDT's authority to issue Serial Preferred Shares under its Articles of Incorporation has long been in existence even before the SIP Program was adopted under P.D. No. 217. The latter was instituted only on June 16, 1973 while its Articles of Incorporation which authorized it to divide its authorized capital stocks into common shares and serial preferred stocks had long been in existence. Respondent company's authority to amend its Articles of Incorporation is inherent in or intrinsic to its corporate existence. (Section 38, B.P. Blg. 68). In the absence of any clear and positive reason for denying it such right, as in this instance, the Commission will not judicially interfere with its corporate prerogative. In any event, there is likewise unquestionable merit in respondent's challenge to the personality and interest of petitioner to institute the case at bar, exclusively grounded as it is on PLDT's alleged violation of a PCGG condition in the lifting of its sequestration order against said respondent. Petitioner admittedly is not an officer or agent of PCGG. He therefore has clearly no right or interest which stands to be impaired or violated by the proposed amendment in question of respondent's Articles of Incorporation, even assuming arguendo that the same constitute a violation of PCGG's condition for the lifting of its sequestration of respondent company. WHEREFORE, the petitioner's prayer for a Provisional Order enjoining respondent PLDT from submitting the proposed amendment of its Articles of Incorporation for the increase of its Serial Preferred Stocks to its stockholders at their Special Meeting on July 15, 1987, is hereby DENIED for lack of merit. SO ORDERED. (SGD.) ANTONIO M. ESTEVES Hearing Officer (SGD.) BERNARDO T. ESPEJO (SGD.) NAPOLEON M. TUMAMAO Hearing Officer Hearing Officer