The Philippines supreme court has directed the Securities and Exchange Commission (SEC) to investigate PLDT for possible violation of the constitutional limit on foreign ownership in utilities. Human rights lawyer Wilson Gamboa sought to annul the sale of the government's 46 percent stake in Philippine Telecommunications Investment (PTI), part owner of Philippine Long Distance Telephone (PLDT), to Hong Kong's First Pacific in 2007. The sale, equivalent to a 6.4 percent indirect stake in PLDT, increased First Pacific's holdings in PLDT to over 30 percent at that time. Gamboa argues that First Pacific and Japan's NTT Docomo held over 50 percent of PLDT's outstanding common shares, violating the limit of 40 percent foreign ownership in a public utility, ABS-CBN reports. The court holds that the term "capital" refers only to shares of stock entitled to vote in the election of directors and thus refers only to common shares and not to the total outstanding capital stock which also includes preferred shares. "Respondent and the SEC is directed to apply this definition of the term 'capital' in determining the extent of allowable foreign ownership in respondent PLDT and if there is violation of Section 11, Article XII of the Constitution, to impose appropriate sanctions under the law," the court ruled. In a statement PLDT said its foreign ownership is well below the limit of 40 percent of its "capital" as this term has been interpreted in numerous opinions issued by the SEC.
