By PNA and U.S. News Agency / Asian

Philippine Long Distance Telephone Co. on Tuesday said it signed an agreement with its affliate to comply with a Supreme Court ruling restricting foreign equity in public utilities.

In a disclosure to the Philippine Stock Exchange, PLDT said it executed a subscription agreement with BTF Holdings Inc., a wholly-owned company of the board of trustees for the account of the Beneficial Trust Fund to which the telco agreed to issue the 150 million shares of voting preferred stock of the company to BTH Holdings for P150 million, or P1 per share.

At present, foreigners hold 58.4 percent of the voting common stock of PLDT. After the issuance of the voting preferred shares, this will be reduced to 34.5 percent

Earlier, the Supreme Court affirmed its earlier decision defining Filipino ownership of public utilities to mean no less than 60 percent of the voting rights of such companies.

Under Section 11, Article XII of the Constitution of the Republic of the Philippines, at least 60 percent of the “capital” of PLDT is required to be owned by Filipinos and no more than 40 percent of the “capital” can be owned by foreigners.

The restriction applies because PLDT operates a public utility in the Philippines.

The Securities and Exchange Commission earlier in its opinion confirmed that the term “capital” includes shares of both common stock and preferred stock, without qualification or distinction.

The High Tribunal granted the petition filed by human rights lawyer Wilson Gamboa, who sought to annul the sale of the government-acquired 111,415 PLDT shares held by Philippine Telecommunications Investment Corp. to Hong Kong-based First Pacific Co. Ltd for P25.2 billion.

First Pacific, along with Japan’s NTT group, are the key shareholders of PLDT.

PLDT said its is not a party to the Gamboa case.”However, the Supreme Court directed the Philippine SEC in the Gamboa case to apply the definition of the term ‘capital’ in determining the extent of allowable foreign ownership in PLDT. To the best of PLDT’s knowledge, the Philippine SEC has not yet commenced any proceeding to determine whether PLDT is in violation of Section 11, Article XII of the Constitution,” PLDT said.

“However, should the Philippine SEC do so, and should there be a finding by thr Philippine SEC of a violation of Section 11, Article XII of the Constitution, such a finding could subject PLDT to sanctions under Philippine law, including possible revocation of PLDT’s franchise,” it said.