Category Archives: Columns

The Joint Panel, created by Justice Secretary Leila de Lima and Comelec Chairman Sixto Brilliantes Jr., is all set to conduct an investigation into the alleged massive cheating during the 2004 and 2007 elections. Separately, Congress is also poised to begin its own probe. Continue reading →

Two readers, probably lawyers, dared me to demonstrate my thesis last Sunday that, absent grave abuse of discretion, the judiciary should refrain from deciding economic and business issues that are best left to the political branches of government, especially the Executive Department. After all, our people look up to the President, ably assisted by his economic team, to alleviate poverty and promote their well-being.

Not legal or logical. Here is my response. The Supreme Court’s decision in Gamboa v. Teves (June 28, 2011) observed that the par value of PLDT voting or common shares is only P5, yet they each earned P70 in 2009. In contrast, the non-voting or preferred shares have a par value of P10, but they earned “a measly P1 per share… In other words, preferred shares have twice the par value of common shares but… (earned) only 1/70 of the dividends of common shares.”

Then, it concluded, “This undeniably shows that beneficial interest in PLDT is not with the non-voting preferred shares (mostly owned by Filipinos) but with the common shares (mostly owned by aliens), blatantly violating the constitutional requirement of 60 percent…  Filipino beneficial ownership in a public utility.”

The uninitiated in business may find the foregoing discussion logical. But I respectfully submit that it is neither legal nor logical. It is not legal because the Constitution does not speak of dividends. Nowhere does it talk of how much each kind of shares should earn. The Charter speaks only of control of a corporation engaged in public utilities, not of “beneficial ownership.”

It is not logical because it ignored the market value of the shares and their rate of returns. The decision itself noted that “the PLDT common shares with a par value of P5 have a current stock market value of P2,328 per share, while the PLDT preferred shares with a par value of P10 per share have a current stock market value ranging from… P10.92 to P11.06 per share.”

Real financial benefits. However, it failed to use this critical information in computing the actual and real financial benefits. Look, on the basis of the facts given by the Court, an investor needs about P11 to buy a PLDT preferred share, which would earn P1. Here, the rate of return on the investment is nine percent. On the other hand, to acquire a common share, an investor must pay P2,328 yet earn only P70 or only about three percent.

On this basis, preferred shares earn three times more than the common shares. So, it is neither logical nor correct to say that “beneficial ownership” in PLDT rests with foreigners just because they hold more common shares than Filipinos.

Clearly, the par values of shares are not determinative of their real worth or earning potential. Investors buy shares depending on their appetite for risks, not on the shares’ par values. Conservatives want preferred shares because they are less risky and their earnings, like bank deposits, are fixed. The adventurous choose common shares because they could potentially be worth much more. Or much less, if the company flops.

While common shares may yield smaller dividends, they can – in time – increase their market value. Sometimes, a company strikes oil, or perfects its high tech products. When this happens, the market value of common shares exponentially grows while the yields of preferred shares remain fixed.

A classic example of exponential growth is Microsoft, which made Bill Gates the richest American. Another example. In 2001, PLDT’s net income was about P3.4 billion; its common shares had a market price of P417. Then, led by Manuel V. Pangilinan and his gung ho Filipino management team, it expanded into high-risk but high-reward wireless digital cell phone technology. In just four years, in 2005, its net income exponentially soared 10 times to P34 billion. And kept growing since then. In 2010, its net income was P40 billion and its common shares’ market price rose to P2,554.

Of course, in bad times, common shares could collapse and reduce billionaires to paupers, as has happened here in 1997, and in the United States in 2008.

But then, that’s what business is all about. It is about taking and managing risks, not about legislating profits or promulgating decisions on economic benefits. It is not for the faint-hearted or for jurists to intrude into unnecessarily.

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New ombudslady. The longest and most thunderous ovation during President Aquino’s Sona reverberated when P-Noy announced the appointment of Justice Conchita Carpio Morales as the new ombudsman. I think this was a tribute to both the President and the retired magistrate.

When we were still sitting in the Supreme Court, Justice Morales and I differed a few times, especially on economic issues. But I have never doubted her probity, integrity, independence and love of country. That is why I fully supported her appointment. Our people, I am sure, can look forward to a fair, objective and robust investigation and prosecution of graft under her watch.

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Aksyon agad! After reading my column, Executive Secretary Paquito Ochoa immediately texted me last Sunday morning praising the OFW call center proposed by Air 21 boss Alberto Lina. He said he would contact Lina and “forge a formal arrangement” to set up the project. Once operational, the center can be called by OFWs anywhere in the world anytime, 24/7, free of charge. Secretary Ochoa’s instant response is exemplary. In contrast, I have yet to hear from the Department of Labor.

Whenever I write about our overseas Filipino workers, as I did last Sunday, I am flooded with e-mail lamenting the government’s inattention to our OFWs’ woes. Many readers are moved by their sad plight and invariably offer creative ideas and out-of-the-box remedies. Continue reading →

If Filipino taipans flock to China and Filipino professionals bloom in the United States (as I reported last Sunday), overseas Filipino workers serve the rest of the world. According to the Commission on Overseas Filipinos, 8.5 million kababayans are spread out in 194 countries. This means that about 10 percent of our total population and about one in every household live and work abroad. Continue reading →

Amid the rising tension in the West Philippine Sea (also known as the South China Sea) over the reputedly oil-rich Spratlys, my wife Leni and I visited China last week (together with Sen. Frank and Mila Drilon, PCGG Chair Andy and Tisha Bautista, bankers Nonoy and Cory Alindogan, and William and Barbara Go). Freely mixing with the locals, we did not encounter anyone inclined to discuss the Spratlys conflicts. People were keener on promoting harmony and prosperity.

Continue reading →

The Supreme Court, in Gamboa vs Teves (June 28, 2011) written by Justice Antonio T. Carpio, ruled that foreign investments in public utilities should be limited to 40 percent of voting shares only, not to the total outstanding capital stock that includes non-voting shares. Continue reading →

Finally and at last, the Supreme Court allowed, in a resolution dated June 14, 2011, the live TV-radio coverage of a criminal case. Though subject to several conditions and though applicable pro hac vice (this time only) to the multiple murder case of Maguindanao Governor Zaldy Ampatuan Jr. et al., this resolution marks the first time that the highest court has authorized the live broadcast of a courtroom drama. Continue reading →

“Patok!” (Pilipino colloquial for perfect) I exclaimed upon learning of the elevation of Mar Roxas to the Department of Transportation and Communications. In contrast, many pundits belittle his DoTC posting as a mere ploy to checkmate him from swallowing more powers as presidential chief of staff, the post originally intended for him. Continue reading →

Divorce is a current buzzword in the public discourse. However, before discussing the termination of a valid marriage (to be distinguished from declaring the nullity or annulment of an invalid union), let me first write about its beginning. When a groom and a bride exchange “I do’s,” the law instantly takes over their personal and property relationship. Continue reading →

To win the war on corruption, President Aquino needs – aside from the Cabinet Cluster on Good Governance and Anti-Corruption – the help of six other government entities. Two are in the Executive Department and are thus subject to his direct control: the Department of Justice and the Office of the Solicitor General. Four are constitutionally independent and are not subject to his control, the Office of the Ombudsman (OMB), the Commission on Audit (COA), the Sandiganbayan (SBN) and, most important, the Supreme Court (SC). The heads of these agencies are the essential “generals” of the anti-graft war. Continue reading →