SC invites ‘friends of court’ to explain limitations of foreign ownership in utilities
BAGUIO CITY, Philippines - Philippine Long Distance Telephone Co. (PLDT) said that even if its common shares are mostly owned by foreigners, the management of the company is still fully controlled by Filipinos.
Magistrates are still not content with the definition as subscribed by the telecom giant’s lawyers on whether the outstanding capital in utility firms refers to both voting and non-voting stocks. Instead, it rescheduled to June 26 the continuation of the oral arguments that started today here in Baguio.
Associate Justice Presbitero Velasco Jr. also sought to invite friends of the court to shed light on the controversy, of which a final resolution will greatly affect the business community.
Asked to appear during the continuation of the oral arguments on June 26 are “amici curiae” and constitutionalists Bernardo Villegas and Joaquin Bernas.
The issue stemmed from the June 28 decision of the high court, which took jurisdiction over the petition filed by PLDT stockholder Wilson Gamboa questioning the sale of the government-sequestered 111,415 Philippine Telecommunications Investment Corp. shares in PLDT to Hong Kong-based First Pacific Co.
The decision of the high court, instead, veered away from the main topic as it directed the Securities and Exchange Commission (SEC) to apply its definition of the word “capital” in determining the extent of allowable foreign ownership in PLDT and impose the appropriate sanctions in case of violations.
The decision said “capital” refers only to the common shares or the voting shares. This means that the 40% constitutional limit on foreign ownership is adopted in the enumeration of common shares.
PLDT lawyer Victor Lazatin argued that this decision will “discourage foreign investments and expose the government to investor suits.”
He admitted that 36% of the common shares of PLDT are in the hands of Filipinos, while the remaining 64% are in foreign hands.
This does not mean, however, that the company is “managed” and “controlled” by foreigners, he said.
He agreed with Velasco, the author of the dissenting opinion, that even if foreigners own a big chunk of the common shares, their voting rights are still limited to the 40% provision in the constitution.
He also said the high court failed to take note that only two of the 14 members of the Board of Directors are foreigners. He said even the independent members are Filipinos.
He said a public utility, especially a listed one, has to create a corporate governance team that will ensure “transparency, fairness and integrity” within the company.
Associate Justice Antonio Carpio was not easily dissuaded, however. He said that ever since 1967, the term “capital” already refers to common- and voting-stocks.
He said the term “Philippine national” has been repeated and adopted in consequent laws referring to investments in the country, which only means that for a company to be referred as one, it should be majority owned by Filipinos.