[News Report] Solgen favors new capital ruling
by: Rey E. Requejo 06/28/12
The chief state counsel has agreed with the interpretation of the Supreme Court of the term “capital” in the constitutional provision, which limits foreign ownership of domestic public utilities to 40 percent.
Solicitor General Francis Jardeleza stressed that the Court’s June 28, 2011 ruling was consistent with the constitutional mandate for the “Filipinization of public utilities,” despite warnings that the court’s ruling would have alleged catastrophic consequences on the country’s economy if it is sustained.
Jardeleza said in response to an appeal that the term capital meant “the shares of stock with the right to vote in the election of officers.”
“The word capital… can only mean voting shares because the Constitution textually conditioned the operation of a public utility to corporations where Filipino citizens own voting shares that can elect a majority of the board,” the chief state lawyer added.
The Solicitor General said interpreting the term capital to include non-voting shares would defeat the constitutional provision for a self-reliant and independent economy effectively controlled by Filipinos.
He said such interpretation could also lead “to absurd result” as foreigners holding common shares equivalent to only .001 percent of the capital would end up controlling the board and operate the public utility even if Filipinos held the remaining 99.99 percent of the capital but non-voting shares.
Source: Manila Standard Today