China’s 40% ownership of NGCP is legal – Law Expert

Marje Pelayo

MANILA, Philippines – Reports of China’s 40% ownership of the National Grid of the Philippines (NGCP) has been on the headlines recently as several senators claimed it would pose threats to national security.

But according to a legal expert, Atty. George Erwin Garcia, the Constitution actually allows foreign entities to have shares in government-owned corporations such as the NGCP.

“From the Constitutional point of view, everything is perfectly legal. So, there is nothing illegal,” Garcia, Dean of the College of Law in Pamantasan ng Lungsod ng Maynila, said.

“There is nothing unconstitutional (with the) 40% Chinese ownership of the National Grid Corporation,” he added.

Senators Ralph Recto and Francis Pangilinan recently raised concerns about possible Chinese manipulation in the Philippines’ power grid given the rights China has on its shares.

Under Article 12 of the 1987 Constitution, foreign ownership is allowed provided that 60% of the company’s shares are owned by a Filipino.

Garcia noted, however, that when it comes to security, the NGCP has to make sure that China has no control of the operations and administrations of their facility.

Read: China’s 40% ownership of NGCP, not threat to national security – PNP

The law also dictates that the foreign investor only has limited rights on the company and the state, which is the Philippine government, still has the full authority of the facility’s full operation.

“Dapat siguraduhin nila, 60-40 ang arrangement (They have to make sure that indeed the arrangement is 60-40). Forty percent nga Chinese pero baka naman ang 60, nasa likod Chinese rin (It might be 40% Chinese but it could be that those behind the other 60% are Chinese as well),” Garcia said.

“Baka naman sila’y naka-front lang for the Chinese o baka naman sila ay tinatawag nating “dummies” for the Chinese. Huwag naman sanang mangyari ‘yun (They could be fronting for the Chinese or like dummies for the Chinese. It must not be that way),” he added.

Senator Sherwin Gatchalian, chairman of the Senate Committee on Energy, previously stated that Chinese experts may provide technical assistance for the NGCP but only Filipinos can manage the entire facility.

In 2015, the Department of Energy (DOE) announced that it would no longer renew the working visas of 18 Chinese experts working then at the NGCP.

But in 2017, NGCP sent 26 engineers and technical staff for training in China to prepare them for much bigger projects.

Despite the issues, the NGCP maintained that the Chinese investors are only up for investments and business tying up with the state-run power grid. MNP (with reports from Harlene Delgado)

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