December 20, 2018

SEC-OGC OPINION NO. 18-24

RE: NATIONALITY REQUIREMENT OF THIRD TELCO

Romulo Mabanta Buenaventura

Sayoc & De Los Angeles
21st Floor, Philamlife Tower
8767 Paseo de Roxas
Makati City, 1226, Philippines

Attention: Atty. Ronaldo Modesto J. Ventura

Dear Atty. Ventura :

This pertains to your letter dated 29 November 2018 requesting from the Commission its
Opinion on whether the terms of the binding Bidding Agreement dated 06 November 2018
entered into by Udenna Corporation (Udenna), Chelsea Logistics Holdings Corp. (Chelsea), China
Telecommunications Corporation (CT) and Mindanao Islamic Telephone Company, Inc. (Mislatel)
(Bidding Agreement) comply with the relevant rules on foreign ownership applicable to the
telecommunications business.
This is in connection with the requirement under Section 10.1 (b) of NTC Memorandum
Circular 09-09-2018 or the Rules and Regulations on the Selection Process for a New Major Player
(NMP) in the Philippine Telecommunications Market (NTC Bidding Rules) which states:
"SEC. 10. ISSUANCE OF CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
(CPCN) AND TERM
xxx xxx xxx
b. Compliance by NMP of Paid Capital of at least P10B and implementation of the
relevant provisions of the Bidding Agreement, if applicable to a Participant which has been
selected as NMP, accompanied by an SEC clearance that the terms of the Bidding
Agreement comply with the relevant rules on the limitation of foreign equity
ownership." 1 (Emphasis and underscoring supplied).
It was further disclosed that Mislatel was recently declared and confirmed by the National
Telecommunications Commission (NTC) as the NMP of the Philippine Telecommunications Market.
CAIHTE

I. BACKGROUND
Under the Bidding Agreement, Mislatel shall be the sole entity to be declared as the NMP
and the recipient of the CPCN and related permits and licenses. On the other hand, Udenna,
Chelsea and CT agree to invest the necessary capital to Mislatel for the purpose of raising its
paid-up capital to enable the latter to comply with the capitalization requirements of an NMP,
which was set at Ten Billion Pesos (Php10,000,000,000.00). 2
Based on the disclosures and Mislatel's 2018 General Information Sheet (GIS), Mislatel
currently has an authorized capital stock amounting to Php200,000,000.00 divided into
200,000,000 common shares with a par value of Php1.00 per share. Out of the 200,000,000
common shares, only 50,003,000 common shares have been subscribed and only
Php32,503,000.00 are paid-up as follows:

Total Par
No. of Value of Percentage
Paid-Up
Shareholder's Name shares Shares (%) of
Amount (Php)
subscribed Subscribed Ownership
(Php)
Marte L. Lascano (Filipino) 3,750,000 3,750,000.00 3,750,000.00 7.50%
Romeo V. Sabillo (Filipino) 3,750,000 3,750,000.00 3,750,000.00 7.50%
Howard U. Evangelista 3,000,000 3,000,000.00 3,000,000.00 6.00%
(Filipino)
Winsberg L. Austria (Filipino) 3,000,000 3,000,000.00 3,000,000.00 6.00%

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 Mariano Pamintuan, Jr. 1,500,000 1,500,000.00 1,500,000.00 3.00%
Nicanor L. (Filipino)
Escalante (Filipino) 5,834,334 5,834,334.00 2,917,667.00 11.67%
Danilo M. Cortez (Filipino) 5,834,333 5,834,333.00 2,917,666.50 11.67%
Levitico C. Toquero (Filipino) 5,834,333 5,834,333.00 2,917,666.50 11.67%
CTE Vector Holdings, Inc. 17,499,999 17,499,999.00 8,749,999.00 34.99%
(Filipino)
Mabelle Grace A. Palay 1 1.00 1.00 0.00%
(Filipino)
Total 50,003,000 50,003,000.00 32,503,000.00 100%

In this connection, pursuant to the Bidding Agreement, Mislatel will apply for an increase in
authorized capital stock with the Commission. As stated in the letter, the planned increase will
only consist of common shares with full voting rights. Accordingly, Udenna, Chelsea, and
CT will subscribe to common shares of Mislatel, all of which will be entitled to vote. It was
clarified that no preferred shares or other class of shares will be created pursuant to the
increase.
As stated in the Bidding Agreement:
1. Description of Financial Investment and Financial Plan.
a. The investment to be financed consists of equity investment in MISLATEL for the
purpose of raising its paid-up capital to enable MISLATEL to comply with the capitalization
requirements of an NMP, which is currently set at PESOS: TEN BILLION
(Php10,000,000,000.00). DETACa

For the avoidance of doubt, the obligations of the Parties as provided in this Section would
only arise upon the issuance by the NTC En Banc of the Confirmation Order in favor of
MISLATEL as the selected NMP.
b. Within the period required in the TOR, MISLATEL shall: (i) cause the increase of its
existing capitalization to:

No. of Shares Amount (Php)

Authorized Capital 10,200,000,000 Php10,200,000,000
Stock
Subscribed Capital 10,050,003,000 Php10,050,003,000
Stock
Paid-up Capital Stock 10,032,503,000 Php10,032,503,000

xxx xxx xxx

c. From MISLATEL's increase in authorized capital stock, the Parties agree as follows:
i. Udenna shall invest the amount of PESOS: THREE BILLION FIVE HUNDRED MILLION
(Php3,500,000,000.00), in MISLATEL, by subscribing and paying for in full in
Pesos, at the subscription share price of PESOS: THREE BILLION FIVE HUNDRED
MILLION (Php3,500,000,000.00) for PESOS: ONE (Php1.00) per share, representing
THREE BILLION FIVE HUNDRED MILLION SHARES (Php3,500,000,000) with par value of
ONE Peso only (Php1.00) each. (Emphasis ours.)
ii. Chelsea shall invest the amount of PESOS: TWO BILLION FIVE HUNDRED MILLION
(Php2,500,000,000.00), in MISLATEL, by subscribing and paying for in full in
Pesos, at the subscription share price of PESOS: TWO BILLION FIVE HUNDRED MILLION
(Php2,500,000,000.00) for PESOS: ONE (Php1.00) per share, representing TWO BILLION
FIVE HUNDRED MILLION shares (2,500,000,000) with par value of ONE Peso only
(Php1.00) each. (Emphasis ours.)
iii. CT shall invest the amount of PESOS: FOUR BILLION (Php4,000,000,000.00), in
MISLATEL, by subscribing and paying for in full in Pesos, at the subscription share price
of PESOS: FOUR BILLION (Php4,000,000,000.00) for PESOS: ONE (Php1.00) per share,
representing FOUR BILLION shares (4,000,000,000) with par value of ONE Peso only
(Php1.00) each.
d. Upon the increase in MISLATEL'S capitalization, the shareholding structure of
MISLATEL shall be as follows:

SUBSCRIBED PAID-UP
%
SHAREHOLDERS No. of No. of
Amount Amount OWNERSHIP
Shares Shares
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 Udenna 3,500,000,000 Php3,500,000,000.00 3,500,000,000 Php3,500,000,000.00 34.83%
Chelsea 2,500,000,000 Php2,500,000,000.00 2,500,000,000 Php2,500,000,000.00 24.88%
CT 4,000,000,000 Php4,000,000,000.00 4,000,000,000 Php4,000,000,000.00 39.80%
Other
Shareholders 50,003,000 Php50,003,000.00 32,503,000 Php32,503,000.00 00.49%

In this regard, the Opinion of the Commission is now being sought on whether the proposed
ownership structure in the Bidding Agreement is compliant with the foreign ownership limitation
on the NMP pursuant to the Constitution and prevailing laws as required by Section 10.1 (b) of
NTC Bidding Rules. aDSIHc

II. RULES ON CORPORATE

NATIONALITY
Section 11, Article XII of the 1987 Philippine Constitution mandates that a franchise,
certificate, or any other form of authorization for the operation of a public utility shall be granted
only to citizens of the Philippines or to corporations or associations organized under the laws of
the Philippines, at least sixty percent of whose capital is owned by such citizens, to wit:
"SECTION 11. 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,
nor shall such franchise, certificate, or authorization be exclusive in character or
for a longer period than fifty years. Neither shall any such franchise or right be granted
except under the condition that it shall be subject to amendment, alteration, or repeal by
the Congress when the common good so requires. The State shall encourage equity
participation in public utilities by the general public. The participation of foreign investors in
the governing body of any public utility enterprise shall be limited to their proportionate
share in its capital, and all the executive and managing officers of such corporation or
association must be citizens of the Philippines." (Emphasis and underscoring supplied).
Under the Public Service Act, entities engaged in telecommunications are deemed
operators of public utility, to wit:
"Section 13. x x x (b) The term "public service" includes every person that now or
hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, x x x
wire or wireless communications system , wire or wireless broadcasting stations and
other similar public services. x x x" 3 (Emphasis and underscoring supplied).
Thus, entities engaged in telecommunications are covered by the Constitutional restriction
on foreign equity.
Public utilities were placed under List A, Item 18 of the 11th Foreign Investment Negative
List (FINL), 4 wherein only up to 40% foreign equity is allowed. As mandated in R.A. No. 7042 or
the Foreign Investments Act of 1991 (FIA), the FINL shall compile and identify all investment
areas or activities which are fully or partially open to foreign investors and/or reserved to Filipino
nationals according to foreign equity restrictions imposed by the Constitution and laws.
With respect to corporations, the FIA deems one to be a "Philippine national" if it is
organized under the laws of the Philippines of which at least 60% of the capital stock outstanding
and entitled to vote is owned and held by citizens or the Philippines. Further, FIA provides that
where a corporation and its non-Filipino stockholders own stocks in a SEC registered enterprise,
at least 60% of the capital stocks outstanding and entitled to vote of both corporations must be
owned and held by Filipino citizens and at least 60% of the members of the Board of Directors of
both corporations must be Filipino citizens, in order that the corporations shall be considered
Philippine nationals. 5
A. Base of the 60%-40% Filipino/Foreign Ownership under Jurisprudence and
SEC Memorandum Circular No. 8, Series of 2013
In the case of Gamboa vs. Teves , 6 the Supreme Court ruled that the "term 'capital' in
Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in
the election of directors, and thus in the present case only to common shares, and not to the total
outstanding capital stock (common and non-voting preferred shares)." 7

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 Pursuant to this, the Commission issued SEC Memorandum Circular No. 8, series of
2013 (SEC-MC No. 8) which uses the two-tiered test in determining compliance with the required
percentage of Filipino ownership (two-tiered test). Under the two-tiered test, the 60%
required Filipino ownership shall be applied to BOTH: (a) the total number of
outstanding shares of stock entitled to vote in the election of directors; AND (b) the
total number of outstanding shares of stock, whether or not entitled to vote in the
election of directors.
In Roy v. Herbosa , 8 the Supreme Court affirmed SEC-MC No. 8 and ruled that it adheres to
the Gamboa v. Teves 2011 Decision and 2012 Resolution, 9 to wit:
"Section 2 of SEC-MC No. 8 clearly incorporates the Voting Control Test or the controlling
interest requirement. In fact, Section 2 goes beyond requiring a 60-40 ratio in favour of
Filipino nationals in the voting stocks; it moreover requires the 60-40 percentage ownership
in the total number of outstanding shares of stock, whether voting or not. The SEC
formulated SEC-MC No. 8 to adhere to the Court's unambiguous pronouncement that "full
beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60
percent of the voting rights is required."
B. Control Test vs. Grandfather Rule
In the Philippines, there are two acknowledged tests in determining the nationality of a
corporation which has corporate stockholders: (i) the Control Test and (ii) the Grandfather Rule.
ETHIDa

The Control Test states that shares belonging to corporations at least sixty percent (60%) of
the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality.
Under this test, there is no need to further trace the ownership of the 60% (or more)
Filipino stockholdings of an investing corporation since a corporation which is at least
60% Filipino-owned is already considered as Filipino. 10
On the other hand, the Grandfather Rule is "the method by which the percentage of Filipino
equity in a corporation engaged in nationalized and/or partly nationalized areas of activities,
provided for under the Constitution and other nationalization laws, is computed, in cases where
corporate shareholders are present, by attributing the nationality of the second or even
subsequent tier of ownership to determine the nationality of the corporate shareholder." 11 Under
this Rule, the Filipino ownership of the investing corporation and the investee corporation are
combined to determine the percentage of Filipino ownership.
Please note that the Grandfather Rule is only applicable when the 60-40 Filipino-
foreign equity ownership is in "doubt." For instance when the investing corporation has less
than 60% Filipino stockholdings and the investee corporation has either 60-40% Filipino-foreign
ownership ratio or has 59% or less Filipino shareholdings. 12 "Doubt", however, is not limited to
these circumstances.
The Supreme Court, in its Resolution in Narra Nickel Mining and Development Corporation
v. Redmont Consolidated Mines, Corp., et al. , 13 explained that even if the 60-40 Filipino to
Foreign equity ratio is apparently met by the investing or investee corporation, a resort to the
Grandfather Rule is necessary if doubt exists as to the locus of the "beneficial ownership" and
"control." The "doubt" refers to, "various indicia that the 'beneficial ownership' and 'control' of the
corporation do not in fact reside in Filipino shareholders but in foreign stakeholders." 14
III. DISCUSSION: USING
THE TWO-TIERED TEST
OF SEC-MC NO. 8
AND/OR THE CONTROL
TEST OR
GRANDFATHER RULE
To illustrate, the proposed structure of Mislatel shall be as follows:

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 In order to determine whether the proposed ownership structure of Mislatel in the Bidding
Agreement conforms to the foreign ownership rules, the nationality of the above-mentioned
stockholders (i.e ., Udenna, Chelsea, CT and "Other Shareholders") must first be determined.
A. Nationality of Udenna
As disclosed, the authorized capital stock of Udenna amounts to Php2,000,000,000.00
divided into 2,000,000,000 common shares with a par value of Php1.00 per share. 15
In this regard, since all shares are common shares (i.e ., shares with voting rights), which
therefore comprise the totality of the Outstanding Capital Stock, it is sufficient to base the 60-
40% requirement on the same to determine the nationality.
As disclosed, all stockholders of Udenna are natural persons and are declared to be Filipino
citizens. 16
Since the voting shares are 100% owned by individual Filipino citizens, Udenna is a
Philippine National. Consequently, its 34.83% direct shareholding in Mislatel is entirely Filipino.
B. Nationality of Chelsea
With respect to Chelsea, it was disclosed that its authorized capital stock is
Php2,000,000,000.00 divided into two classes of shares: (1) 1,990,000,000 common shares with
a total par value of Php1,990,000,000.00 and (2) 10,000,000 preferred shares with a total par
value of Php10,000,000.00. It was further disclosed that only the common shares of
Chelsea are presently subscribed. cSEDTC

Chelsea is a company listed in the Philippine Stock Exchange where a minimum 10% public
float is required. 17 Public float represents the percentage of shares of a listed corporation that
were bought and owned by public investors (local and foreign).
Hence, the following is the corporate structure of Chelsea: 18

Since only the voting shares of Chelsea are subscribed, it is sufficient to base the
computation of the 60-40 requirement on the same, to determine compliance with SEC MC No. 8.
To reiterate, Udenna is already established as a Philippine National. Hence, its 70% interest
in Chelsea is considered Filipino. Since more than 60% or 70% to be exact, of Chelsea is held by
the Filipino investing corporation Udenna, then, at the onset, there is no "doubt". Further, based
on your letters, Udenna has fully paid its subscribed shares in Chelsea and plans to do the same
in Mislatel; thus, the "indicia" of doubt laid out in Narra Nickel is absent in this case, considering
that majority of the funds in Chelsea and Mislatel came from Udenna. Absent any other "indicia
of doubt," the Control Test, not the Grandfather Rule, will be applied. Using the Control Test,
Chelsea is a Philippine national, hence, its 24.88% shareholding in Mislatel should be considered
Filipino.
C. Nationality of Other Shareholders
The "Other Shareholders" mentioned in the proposed ownership structure of Mislatel refers
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 to the current stockholders of Mislatel, to wit:

Total Par Value

No. of
Shareholder's of Shares Paid-Up
shares
Name/Nationality Subscribed Amount (Php)
subscribed
(Php)
Marte L. Lascano (Filipino) 3,750,000 3,750,000.00 3,750,000.00
Romeo V. Sabillo (Filipino) 3,750,000 3,750,000.00 3,750,000.00
Howard U. Evangelista 3,000,000 3,000,000.00 3,000,000.00
(Filipino)
Winsberg L. Austria (Filipino) 3,000,000 3,000,000.00 3,000,000.00
Mariano Pamintuan, Jr. 1,500,000 1,500,000.00 1,500,000.00
(Filipino)
Nicanor L. Escalante (Filipino) 5,834,334 5,834,334.00 2,917,667.00
Danilo M. Cortez (Filipino) 5,834,333 5,834,333.00 2,917,666.50
Levitico C. Toquero (Filipino) 5,834,333 5,834,333.00 2,917,666.50
CTE Vector Holdings, Inc. 17,499,999 17,499,999.00 8,749,999.00
(Filipino)
Mabelle Grace A. Palay 1 1.00 1.00
(Filipino)

Based on the table, apart from CTE Vector Holdings, Inc. (CTE Vector), all other
shareholders are natural persons and declared to be Filipinos.
With respect to CTE Vector, as disclosed all its shareholders are all natural persons who are
Filipinos. 19 Though the letter is silent on the classes of shares, based on the Articles of
Incorporation filed with the Commission, the entire outstanding shares of stock of CTE Vector is
composed of common shares. 20 Since all the voting shares of CTE Vector are 100% owned by
Filipino citizens, CTE Vector in turn is a Philippine National.
Collectively, therefore, the "Other Shareholders" are 100% Filipinos.
D. Nationality of Mislatel under the Bidding Agreement
It can be recalled that the following shall be the proposed ownership structure of Mislatel
under the Bidding Agreement: 21

Similar to Udenna, since all shares of Mislatel are common shares (i.e ., shares with voting
rights), which comprise the totality of its Outstanding Capital Stock, it is sufficient to base the 60-
40% requirement on the same to determine the nationality. Applying the Control Test and the
SEC-MC No. 8, therefore, the foreign equity and Filipino equity in Mislatel shall be computed as
follows:

Foreign Equity (voting

shares)

CT = 39.80%

Filipino Equity (voting

shares)

Udenna 34.83%

Chelsea 24.88%

Marte L. Lascano 0.037%

Romeo V. Sabillo 0.037%

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 Howard U. Evangelista 0.030%
Winsberg L. Austria 0.030%

Mariano Pamintuan, Jr. 0.010%

Nicanor L. Escalante 0.060%

Danilo M. Cortez 0.060%

Levitico C. Toquero 0.060%

Mabelle Grace A. Palay 0.000%

CTE Vector Holdings, 00.170%

Inc.

–––––––––

TOTAL = 60.204%

========

Assuming, for the sake of argument, that "doubt" warranting the use of the Grandfather
Rule exists, the Filipino and Foreign ownership of Mislatel shall be computed as follows: SDAaTC

Using the Grandfather Rule, the computation shall be as follows:

A. Shares which Filipinos will Directly and Indirect Hold
Udenna (100% Filipino)
Shares Udenna will directly hold = 34.83%
Shares Udenna will indirectly hold
= 17.42%
(24.88% x 70%)
TOTAL shares Udenna will directly and indirectly
= 52.3%
hold
PCD Nominee Corporation (Filipino)
Shares it will indirectly hold = 7.24%
(24.88% x 29.12%)
Individual Shareholders of Chelsea (Filipino)
Shares they will indirectly hold = 0.01%
(24.88% x 0.06%)
"Other Shareholders" of Mislatel
= 0.49%
Shares they will directly hold
––––––
TOTAL FILIPINO SHARES = 60%
=====

B. Shares Non-Filipinos will Directly and Indirectly Hold

PCD Nominee Corporation (Non-Filipino)
Shares it will indirectly hold = 0.20%
(24.88% x 0.8%) 23
CT (Non-Filipino)
= 39.80%
Shares it will directly hold
––––––
TOTAL NON-FILIPINO SHARES = 40%
=====

Using the Grandfather Rule, 60% of Mislatel shares will be directly and indirectly held by
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 Filipinos while 40% will be directly and indirectly held by Non-Filipinos. Under the Grandfather
Rule, the proposed ownership structure in the Bidding Agreement is still compliant with the
foreign ownership limitation for NMP.
In closing, please be mindful of the requirement of dispersal of ownership under Section 16
of the R.A. No. 8627 or the Act Granting Mislatel its Legislative Franchise:
"Section 16. Dispersal of Ownership. — In accordance with the constitutional provisions
to encourage public participation in the public utilities, the grantee shall offer at least thirty
percentum (30%) of its outstanding capital stock or a higher percentage that may hereafter
be provided by law in any securities exchange in the Philippines within five (5) years from
the commencement of its operations. Noncompliance therewith shall render the franchise
ipso facto revoked."
Based on the foregoing, Mislatel shall offer at least 30% of its outstanding capital stock in
any securities exchange. Please note, however, that per SEC's records, Mislatel is not yet a
publicly listed corporation 24 and cannot, therefore, offer and sell to the public a portion of their
outstanding capital stock in any securities exchange. It should be noted, however, that should
Mislatel sell its shares to the public, or list in an exchange in compliance with R.A. No. 8627, it
must conform to the requirements of the Securities Regulation Code ("SRC") and SEC rules. Most
importantly, any transfer of ownership pursuant to such dispersal of ownership
requirement should not exceed the foreign ownership limitation.
Also, please take note of the limitation in the Board composition under the Anti-Dummy
L a w , 25 which confines the number of foreign directors in proportion to their allowable
participation or share in the capital.
Lastly, it shall be understood, that the foregoing opinion is rendered based solely on the
facts and circumstances disclosed and relevant solely to the particular issue raised therein. It
shall not be used in the nature of a standing rule binding upon the Commission in other cases or
upon the courts whether of similar or dissimilar circumstances. 26 If, upon further inquiry or
investigation, it will be disclosed that the facts relied upon are different, this opinion shall be
rendered void.
Please be guided accordingly. acEHCD

By authority of the Commission En Banc:

(SGD.) CAMILO S. CORREA

General Counsel

ANNEX A
Udenna's Ownership Structure
As disclosed, the current authorized capital stock of Udenna amounts to Php2,000,000,000.00,
divided into 2,000,000,000 common shares with a par value of Php1.00 per share. The shares of
Udenna are subscribed to by the following shareholders:

Total Par Value Percentage

Shareholder's No. of shares Paid-Up Amount
Capacity of Shares (%) of
Name subscribed (Php)
Subscribed (Php) Ownership
Dennis A. Uy Beneficial
1,400,000,000 1,400,000,000.00 1,400,000,000.00 70.00%
(Filipino) Owner
Cherylyn C. Uy Beneficial
599,999,993 599,999,993.00 599,999,993.00 30.00%
(Filipino) Owner
Chryss Alfonsus Trustee of
V. Damuy Cherylyn Uy 1 1.0 1.0 0.00%
(Filipino)
Ignacia S. Braga Trustee of
1 1.0 1.0 0.00%
IV (Filipino) Cherylyn Uy
Meldin Alfonso Trustee of
1 1.0 1.0 0.00%
G. Roy (Filipino) Cherylyn Uy
Leandro E. Trustee of
Abarquez Cherylyn Uy 1 1.0 1.0 0.00%
(Filipino)

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 Ma. Concepcion Trustee of 1 1.0 1.0 0.00%
F. De Claro Cherylyn Uy
(Filipino)
Raymundo Trustee of
Martin M. Cherylyn Uy
1 1.0 1.0 0.00%
Escalona
(Filipino)
Wilfredo A. Trustee of
Placino Cherylyn Uy 1 1.0 1.0 0.00%
(Filipino)
TOTAL 2,000,000,000 2,000,000,000.00 2,000,000,000.00 100.00%

ANNEX B
Chelsea's Ownership Structure
As disclosed that the authorized capital stock of Chelsea is Php2,000,000,000.00 and divided into
two classes of shares: (1) 1,990,000,000 common shares with a total par value of Php1,990,000,000.00
and (2) 10,000,000 preferred shares with a total par value of Php10,000,000.00. It was further
disclosed and consistent with its 2018 GIS that only the common shares of Chelsea are
presently subscribed.

Total Par Value Percentage

Shareholder's No. of shares Paid-Up Amount
Capacity of Shares (%) of
Name subscribed (Php)
Subscribed (Php) Ownership
Udenna
Beneficial
Corporation 1,275,384,606 1,275,384,606.00 1,275,384,606.00 70.00%
Owner
(Filipino)
PCD Nominee
Corporation 530,552,872 530,552,872.00 530,552,872.00 29.12%
(Filipino)
PCD Nominee
Corporation 14,751,220 14,751,220.00 14,751,220.00 0.8%
(Non-Filipino)
Caroline G. Beneficial
800,000 800,000.00 800,000.00 0.04%
Taojo (Filipino) Owner
Noe B. Taojo Beneficial
400,000 400,000.00 400,000.00 0.02%
(Filipino) Owner
Myra P.
Beneficial
Villanueva 9,300 9,300.00 9,300.00 0.00%
Owner
(Filipino)
Milagros P.
Beneficial
Villanueva 7,300 7,300.00 7,300.00 0.00%
Owner
(Filipino)
Myrna P.
Beneficial
Villanueva 7,300 7,300.00 7,300.00 0.00%
Owner
(Filipino)
Marietta V.
Beneficial
Cabreza 5,000 5,000.00 5,000.00 0.00%
Owner
(Filipino)
Edwin L.
Lapasaran Lim Beneficial
60,000 60,000.00 60,000.00 0.00%
or Mary Hope Owner
Lim (Filipino)
Cherylyn C. Uy Beneficial
1 1.00 1.00 0.00%
(Filipino) Owner
Owen Nathaniel
S. Au ITF: Li Beneficial
10 10.00 10.00 0.00%
Marcus Au Owner
(Filipino)
Efren E. Uy Beneficial
1 1.00 1.00 0.00%
(Filipino) Owner
Arthur Kenneth Beneficial
1 1.00 1.00 0.00%
L. Sy (Filipino) Owner
Eduardo A.
Beneficial
Bangayan 1 1.00 1.00 0.00%
Owner
(Filipino)
Miguel Rene A.
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 Dominguez Beneficial 1 1.00 1.00 0.00%
(Filipino) Owner
Jesus S.
Beneficial
Guevarra II 1 1.00 1.00 0.00%
Owner
(Filipino)
Gener T. Beneficial
1 1.00 1.00 0.00%
Mendoza Owner
TOTAL 1,821,977,615 1,821,977,615.00 1,821,977,615.00 100.00%

ANNEX C
CTE Vector
As disclosed, the following are the shareholders of CTE Vector: SDHTEC

Total Par
No. of Value of Percentage
Shareholder's Paid-Up
Capacity shares Shares (%) of
Name Amount (Php)
subscribed Subscribed Ownership
(Php)
Nicanor L.
Beneficial
Escalante 8,330,000 8,330,000.00 8,330,000.00 33.32%
Owner
(Filipino)
Danilo M. Cortez Beneficial
8,330,000 8,330,000.00 8,330,000.00 33.32%
(Filipino) Owner
Levitico C.
Beneficial
Toquero 8,330,000 8,330,000.00 8,330,000.00 33.32%
Owner
(Filipino)
Alfredo V.
Beneficial
Bacolod 5,000 5,000.00 5,000.00 0.02%
Owner
(Filipino)
Mabelle Grace
Beneficial
A. Palay 5,000 5,000.00 5,000.00 0.02%
Owner
(Filipino)
TOTAL 25,000,000 25,000,000.00 25,000,000.00 100.00%

ANNEX D
Detailed List of Proposed Stockholders and Their Percentage of Ownership under the Bidding
Agreement
Based on the Bidding Agreement, below are the detailed list of the stockholders with their
calculated percentage of ownership:

%
TYPE SUBSCRIBED PAID-UP
OWNERSHIP
SHAREHOLDERS NATIONALITY OF
SHARES No. of No. of
Amount (Php) Amount (Php)
Shares Shares
Udenna Filipino Common 3,500,000,000 3,500,000,000.00 3,500,000,000 3,500,000,000.00 34.83%
Chelsea Filipino Common 2,500,000,000 2,500,000,000.00 2,500,000,000 2,500,000,000.00 24.88%
CT Non-Filipino Common 4,000,000,000 4,000,000,000.00 4,000,000,000 4,000,000,000.00 39.80%
Marte L.
Filipino Common 3,750,000 3,750,000.00 3,750,000 3,750,000.00 0.037%
Lascano
Romeo V.
Filipino Common 3,750,000 3,750,000.00 3,750,000 3,750,000.00 0.037%
Sabillo
Howard U.
Filipino Common 3,000,000 3,000,000.00 3,000,000 3,000,000.00 0.030%
Evangelista
Winsberg L.
Filipino Common 3,000,000 3,000,000.00 3,000,000 3,000,000.00 0.030%
Austria
Mariano
Filipino Common 1,500,000 1,500,000.00 1,500,000 1,500,000.00 0.010%
Pamintuan, Jr.
Nicanor L.
Filipino Common 5,834,334 5,834,334.00 5,834,334 2,917,667.00 0.060%
Escalante
Danilo M.
Filipino Common 5,834,333 5,834,333.00 5,834,333 2,917,666.50 0.060%
Cortez
Levitico C.
Filipino Common 5,834,333 5,834,333.00 5,834,333 2,917,666.50 0.060%
Toquero
Mabelle Grace
A. Palay Filipino Common 1 1.00 1 1.00 0.000%
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 CTE Vector
Filipino Common 17,499,999 17,499,999.00 17,499,999 8,749,999.00 00.170%
Holdings, Inc.

Footnotes
1.NTC Memorandum Circular No. 09-09-2018, Rules and Regulations on the Selection Process for a New
Major Player in the Philippine Telecommunications Market.

2. Section 2.2 (b), NTC Memorandum Circular 09-09-2018.

3. Commonwealth Act No. 146, An Act to Reorganize the Public Service Commission, Prescribe its
Powers and Duties, Define and Regulate Public Services, Provide and Fix the Rates and Quota of
Expenses to be Paid by the Same, and for Other Purposes.

4. Executive Order No. 65, Promulgating the Eleventh Regular Foreign Investment Negative List.

5. Section 3, Republic Act No. 7042, Foreign Investments Act, Approved on 13 June 1991.

6. Heirs of Gamboa v. Teves, G.R. No. 176579, 28 June 2011.

7. Ibid.

8. Jose M. Roy III v. Chairperson Teresita Herbosa , G.R. No. 207246, 22 November 2016.

9. Gamboa v. Teves , G.R. No. 176579, 09 October 2012.

10. Narra Nickel Mining and Development Corporation, et al. v. Redmont Consolidated Mines
Corporation, G.R. No. 195580, 21 April 2014, citing DOJ Opinion No. 020, series of 2005.
11. Narra Nickel Mining and Development Corporation, et al. vs. Redmont Consolidated Mines
Corporation, G.R. No. 195580, 28 January 2015, citing Villanueva, Cesar Lapuz, Philippine
Corporate Law (2001), p. 54.

12. Id., at Note 10.

13. Id., at Note 11.

14. Id., at Note 11.

15. This is consistent with Mislatel's 2018 General Information Sheet (GIS).

16. Attached as Annex A is the list of the shareholders of Udenna you disclosed to this Commission.
17. SEC Memorandum Circular No. 13, Series of 2017 in connection with PSE Supplemental Rule 6 —
PSE Memorandum No. 2010-050 dated 28 October 2010 re: Rule on Minimum Public Ownership;
Supplemental Rule 6.1 — PSE Memorandum CN No. 2012-003 dated 3 January 2012 re:
Amended Rule on Minimum Public Ownership .
18. Attached as Annex B is the detailed list of the stockholders of Chelsea and their shares.

19. See Annex C.

20. Section 6, Corporation Code of Philippines, Batas Pambansa Blg. 68, Approved on May 1, 1980.

21. Attached as Annex D is the detailed list of stockholders of Mislatel under the Bidding Agreement.

22. *NOTE: PCD Nominee Corporation (PCNC) is "a wholly owned subsidiary of the Philippine Central
Depository, a corporation established to improve operations in securities transactions and to
provide a fast, safe and highly efficient system for securities settlement in the Philippines. PCNC
acts as trustee-nominee for all shares lodged in the PCD system, where trades effected on the
Philippine Stock Exchange are finally settled with the PCD. Persons who opt to trade using the
PCD do not receive stock certificates as an indicator of ownership as trading using the PCD is
completely paperless.

  PCNC serves as one of the largest shareholders, if not the largest shareholder, in many Philippine
corporations. For example, PCNC is the second largest shareholder in Banco de Oro, the
Philippines' largest bank, with the corporation owning approximately 25% of BDO stock, below
SM Investments Corporation, which owns approximately 29% of BDO as of March 31, 2009.
However, while it may appear that PCNC is the actual shareholder in the said company, shares
held by PCNC do not grant voting powers to it as beneficial ownership of the shares still remain
with the lodging stockholder. By policy, PCNC does not vote the shares it was entrusted with in
its name. Additionally, PCNC is owner of 49% of IPVG Corporation, a major technology company
in the Philippines." (Source: http://enacademic.com/dic.nsf/enwiki/11084088)
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 23. NOTE: Assuming that the Grandfather Rule is applicable, it is most prudent to closely monitor the
trading of these shares at the stock exchange and to ensure that foreign ownership of these
shares does not exceed these levels, otherwise, the total non-Filipino shares will breach the
40% limit.
24. Under Rule 3.1.16 of the Implementing Rules and Regulations of the SRC, a Public Company is
defined as "any corporation with a class of equity securities listed on an Exchange or with
assets in excess of Fifty Million Pesos (P50,000,000.00) and has two hundred (200) or more
holders each holding at least one hundred (100) shares of a class of its equity securities."

25. Commonwealth Act No. 108, amending Presidential Decree No. 715.
26. SEC Memorandum Circular 2003-15, No. 7.

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