MANILA, Philippines (UPDATE) - The Supreme Court affirmed an earlier decision putting to question the more than 60% foreign ownership in Philippine Long Distance Telephone Co. (PLDT).
Two sources from the SC said 10 of the members of the high court stood pat on the decision of Senior Justice Antonio Carpio last June 28, 2011.
Three justices dissented, Associate Justices Presbitero Velasco, Jr., Roberto Abad and Bienvenido Reyes. Reyes was not in the original decision.
Sought for comment, PLDT lawyer Ray Espinosa said, "PLDT cannot comment until it has read an official copy of the decision, has determined its importance, and has received advice from its lawyers."
The original decision of the high court 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, excluding the preferred or non-voting shares.
The SC decision is expected to have an impact on the Philippine business environment since it has changed the definition of "capital" in determining the extent of foreign ownership.
PLDT chairman Manuel V. Pangilinan, PLDT president Napoleon Nazareno, the Philippine Stock Exchange, SEC and others had asked the high court to reverse its decision.
During the oral arguments in April this year, the justices were not dissuaded. Carpio himself 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.
Also during the oral arguments, a PLDT lawyer admitted that even if its common shares are mostly owned by foreigners, the management of the company is still fully controlled by Filipinos.
In the original SC decision, it was noted that based on PLDT’s 2010 General Information Sheet, foreigners held 64.27% of the total number of PLDT’s common shares, while Filipinos held only 35.73%.
"Since holding a majority of the common shares equates to control, it is clear that foreigners exercise control over PLDT. Such amount of control unmistakably exceeds the allowable 40 percent limit on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the Constitution," the decision read. - with a report from Ina Reformina, ABS-CBN News