DTI to do own review of SC ruling on PLDT

The Department of Trade and Industry will be conducting its own review of a legal provision on which the Supreme Court based its recent ruling that concerns Philippine Long Distance Telephone Co.’s ownership structure.

Trade Undersecretary Cristino Panlilio said the Supreme Court had merely “confirmed” what was contained in the Foreign Investments Act of 1991 when it directed the Securities and Exchange Commission to review PLDT’s ownership structure and determine if foreigners hold a maximum 40 percent of its shares.

“The Supreme Court said it was not interpreting the law, but just confirming it. We’ll have to review that particular provision of the law ourselves,” Panlilio told reporters Thursday. “If it will be a disincentive (to investors), we can go for a legislative amendment.”

One of the definitions of a “Philippine national” under Section 3a of the Foreign Investments Act is “a corporation organized under the laws of the Philippines of which at least 60 percent of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines.”

This is used to determine the extent of local ownership in sectors with restrictions on foreign shareholdings, including public utilities such as telecommunications.

In earlier interviews, PLDT chairman and chief executive Manuel Pangilinan admitted that if the definition of “capital,” in this case, would only take into consideration voting or common shares, PLDT would end up being majority-owned by foreigners at 64 percent.

If total outstanding capital stock would be considered, regardless of whether the shares were common or preferred, then only 13 percent of the company would be owned by foreigners.

The Joint Foreign Chambers earlier expressed apprehension over the review, saying this could increase the level of uncertainty for foreign entities with equity in local firms.

European Chamber of Commerce of the Philippines vice president for external affairs Henry Schumacher said the Cabinet should do its part in clarifying this issue, to prevent further confusion.