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Reverse ruling on PLDT ownership, Pangilinan asks Supreme Court

July 18, 2011 6:30pm

Business tycoon Manuel V. Pangilinan has asked the Supreme Court to overturn its decision on how much local telecommunications giant Philippine Long Distance Telephone Co. (PLDT) can be owned by foreigners.

In a 50-page motion for reconsideration filed last July 15, Pangilinan warned the Supreme Court of the dire consequences of its redefinition of the term “capital" found in Section 11, Article XII of the 1987 Constitution.

“If the Court does not reconsider, that unwarranted redefinition will have very serious adverse repercussions for the partially nationalized industries affected, the Philippine capital market, the Philippine economy in general and the country as a whole. There will be no telling if and how those severe consequences can be survived," said Pangilinan. [See: PLDT warns SC ruling impact on share prices]

In a decision last June 28, the high court said the term “capital" refers to common shares, which entitle a holder to participate in the voting for the firm's directors. The SC clarified that the term “capital" does not refer to the total outstanding capital stocks, which constitute common shares and non-voting shares.

Applying the SC’s definition, this means that PLDT exceeded the maximum 40-percent foreign ownership in public utilities allowable under the Charter because foreigners “unmistakably" control more than 64 percent of the firm’s common shares. [See: SC: PLDT breached Constitution’s foreign ownership limits]

“In other words, foreigners hold 64.27 percent of the total number of PLDT common shares while the Filipinos hold only 35.73 percent. 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 SC decision stated.

Despite such findings, the SC still ordered the state regulatory body Securities and Exchange Commission (SEC) to check the extent of allowable foreign ownership in PLDT and to determine whether PLDT violated the constitutional provision that limits foreign ownership in public utilities.

Error in definition of ‘capital’ ?

Pangilinan pointed out what he sees as an “error" in the high court’s definition of the term “capital" in the 1987 Constitution.

“With all due respect, the [SC] Majority is able to reach this conclusion only because it accepted the petitioner's erroneous premise that Filipino control of public utilities can be achieved only, or even principally or more effectively, by Filipinos owning and casting 60-percent of the votes in the election of the directors," he said.

The business magnate said the SC “also [did] not consider the complete deliberations of the 1986 Constitutional Commission on the subject and also [did] not consider the country's history and the situation confronting the 1986 Constitutional Commission when it adopted the language and the measures in Section 11, Article XII."

He likewise insisted that there was nothing wrong with inviting foreign investors to the 2007 public bidding of 111,415 PLDT shares then held by state-owned Philippine Telecommunications Investment Corp. (PTIC).

Pangilinan's lawyers said: “He wishes to take this opportunity to explain why he believed, and still believes with far more conviction now, that the Philippine government acted correctly and constitutionally and knew what it was doing when it held a public biding for the 111,415 PTIC shares without limiting participation to only Filipino citizens but instead actively invited bids from foreign investors."

Pangilinan: SC has no jurisdiction

Pangilinan also questioned the high court's jurisdiction to rule on the petition of lawyer-accountant Wilson Gamboa, who had wanted to annul the sale of government-acquired 111,415 PLDT shares to Hong Kong-based First Pacific Co. Ltd. which is affiliated with Pangilinan. At the time of the transaction, the shares were valued at P25.2 billion and sold by PTIC.

He likewise asserted that the SC had a “clear lack of jurisdiction" in handling Gamboa's petition which was filed in 2007.

“The 1987 Constitution does not give the Court jurisdiction to entertain petitioner's declaratory relief application and the [SC] Majority may not get around the constitutional limits to the Court's jurisdiction and powers by considering that declaratory relief application as a mandamus petition," the businessman said.

Declaratory relief is a legal remedy where one party asks the court to determine that party’s rights as regards an action between two other parties, as in Gamboa’s petition, the government’s rights in the sale between First Pacific and PTIC. On the other hand, mandamus is a legal remedy for the courts to direct a government body to perform a ministerial duty.

Also in his appeal, Pangilinan said that SEC is not a party to the case because only former SEC chair Fe Barin was impleaded as a respondent.

"Impleading her is not impleading the SEC. The SEC is a collegial commission belonging to the executive branch of government which should itself have been impleaded as the proper public respondent," Pangilinan said.

The business magnate was represented by the law firm SyCip Salazar Hernandez and Gatmaitan. — MRT/VS, GMA News
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