SC hears motion to review ruling vs PLDT foreign ownership

MANILA, Philippines – The Supreme Court will hear today the economic repercussions of its decision ordering an investigation to determine if the Philippine Long Distance Telephone Company (PLDT) violated the constitutional cap on foreign ownership.

Earlier, Chief Justice Renato Corona said the high tribunal’s decision changing the calculation to determine foreign ownership in public utilities was purely legal because no one mentioned about its economic implications.

The Philippine Stock Exchange (PSE), in its motion for reconsideration, told the Supreme Court that the implementation of the new and strict definition of the term “capital” could lead to a loss of about P630-billion allowable foreign investments in PSE listed shares.

The high court decision, the PSE said, “could result in massive decrease in foreign trading transactions brought about by huge reduction in the PSE-listed shares allowable to foreigners.”

PSE said massive reduction in both allowable foreign investments and level of foreign trading transactions will result in lower PSE Composite Index, which will be construed negatively by the International market.

In its decision last year, the high court issued a stricter definition of the term “capital,” which will be used as guide by the Securities and Exchange Commission (SEC) in determining if it violated the constitutional cap on foreign ownership

PSE said PLDT alone represents 12 percent of the total foreign trading activity of the Philippine stock market and the PSE Composite Index is heavily determined by the volume of trading transactions in PLDT shares since PLDT shares are given the biggest weight in determining the movements in the PSE composite index.

The PSE Composite Index is tracked by both local and international funds and is considered as a good indicator of the state of the Philippine economy.

PSE said that the term “capital” under Section 11 Article 12 of the 1987 Constitution has been recognized in a long line of Supreme Court decision as the one with universal acceptance to refer to “money, property or means contributed by stockholders as the form or basis for the business or enterprise for which the corporation was formed and generally implies that such money or property or means have been contributed in payment for stock issued to the contributors.”

Aside from PSE, businessman Manuel Pangilinan also has a pending motion for reconsideration.