Commissioner Armi Jane R. Borje

June 2, 2003 SEC OPINION NO. 32-03 Commissioner Armi Jane R. Borje National Telecommunications Commission Department of Transportation and Communications BIR Road, East Triangle, Diliman, Quezon City Dear Commissioner Borje, This refers to your letter dated May 22, 2003 wherein you stated the following query: "May we know how the Securities and Exchange Commission consider Next Mobile, Inc.; whether or not a Filipino corporation at least 40% Filipino-owned." Please note that Article XII, Section 11 of the Philippine Constitution provides: "No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, . . ." The legal capacity of the corporation to acquire franchise, certificate or authority for the operation of a public utility is regulated by the aforequoted Constitutional provision, which requires that at least sixty per centum (60%) of the capital of such corporation be owned by citizens of the Philippines. However, such provision does not qualify whether the required ownership of "capital" shall be that of the voting or non-voting, common or preferred. Hence, it should be interpreted to refer to the sum total of the outstanding capital stock, irrespective of the nomenclature or classification as common, preferred, voting or non-voting. 1 In the case of Next Mobile, Inc., its submitted General Information Sheet ("GIS") dated December 2, 2002 reveals that its entire stockholdings is comprised of 60% Filipino equity, at 2,038,598 common shares, and only 40% foreign equity, at 1,359,065 shares. Thus, Next Mobile, Inc. is in compliance with the above-stated Constitutional requirement on Filipino ownership. Hence, for so long as the percentage of Filipino ownership of the capital stock of all the corporate stockholders is at least 60% thereof, the entire stockholdings of a given corporation shall be considered as of Philippine nationality. aHcACT However, please note that on July 10, 1998, thirty-two percent (32%) of the stockholders of record of Infocom Communications Network, Inc. (later amended its name to Nextel Communications Philippines, Inc. and now, Next Mobile, Inc.) filed a Petition before this Commission alleging violations of Article XII, Section 11 of the 1987 Constitution, as well as the Anti-Dummy Law. Such case, which was docketed as SEC Case No. 07-98-6030, was transferred to the Regional Trial Court of Pasig City, Branch 158 on November 21, 2000 after the effectivity of the Securities Regulation Code (Republic Act No. 8799). The subject case is still pending before RTC Branch 158. Moreover, on March 19, 2003, two (2) members of the House of Representatives, namely Rep. Harlin C. Abayon and Rep. Prospero C. Nograles, filed House Resolution No. 1067 seeking the investigation of Nextel International Inc. and Nextel Communications Philippines, Inc. (now Next Mobile, Inc.) for alleged violation of the 1987 Constitution. Later, the House Committee on Transportation and Communication initiated its investigations for alleged violations both of the Constitution and the Anti-Dummy Law by Next Mobile, Inc. In this light, it is imperative that we reiterate the policy of this Commission in refraining from rendering opinions that might prejudice or affect the outcome of a case, which is subject to present litigation before the courts, or any other forum for that matter. The opinion, which may be rendered thereon, would not be binding upon any party who would in all probability, if the opinion happens to be adverse to his or its interest, take issue therewith and contest it before the proper venue. The Commission, therefore, has to refrain from giving categorical answers to your query: We hope we have fully addressed your concerns. Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel Footnotes 1. SEC Opinion dated 27 December 1995 addressed to Joaquin Cunanan & Co.