By Perfecto T. Raymundo, Jr.
The Philippine Long Distance Telephone Co. (PLDT) has maintained that it never violated the constitutional provision that limits foreign ownership of public utilities to only 40 percent.
PLDT legal counsel Victor Lazatin reiterated this position during the oral arguments here about PLDT's petition for reversal of Supreme Court's (SC) June 28, 2011 ruling, which redefined the term "capital" in Section 11, Article 12 of the 1987 Philippine Constitution that puts a cap on foreign ownership of domestic public utilities.
At present, 36 percent of PLDT's common shares are owned by Filipinos, and 64 percent are in foreign hands but it does not mean that foreigners control the public utility, Lazatin said.
He said that PLDT abides by the Constitution and only gives 40 percent of voting shares to the foreign stockholders.
Lazatin said that if the SC decision is not reversed, it will cause adverse repercussions on the Philippines' investment climate, if not the whole economy.
He said that it will discourage foreign investments and expose government to investor suits under bilateral treaties.
The SC defined "capital" as shares of stock entitled to vote in the election of directors or the so-called common shares and not to the total outstanding, "capital stock," composed of "common" or voting shares and "preferred" or "non-voting shares."
The SC also directed the Securities and Exchange Commission (SEC) "to apply this definition of the term 'capital' in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company and if there is violation of Section 11, Article XII of the Constitution, to impose appropriate sanctions under the law."
The SC decision stemmed from the complaint filed by human rights lawyer Wilson Gamboa, 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. in the amount of P25.2 billion.
Gamboa said that the sale violated the constitutional limitation on foreign ownership of a public utility and that the respondents committed grave abuse of discretion by allowing the sale of PTIC shares to First Pacific.
At the end of the oral arguments, SC Chief Justice Renato Corona ordered the clerk of court to invite as "amici curiae" (or friends of the court) constitutional law expert Fr. Joaquin Bernas and economics expert Bernardo Villegas to shed light on the issue.
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