MANILA - First Philippine Holdings Corp, the holding firm of the Lopez business clan, is open to selling its remaining 13.4 percent stake in Manila Electric Co if needed, its chairman said on Monday.

If the Lopez family, one of the Philippines' most powerful dynasties, decides to sell out of the country's largest power distributor, its business ally PLDT group will have priority over the family's stake as part of a deal struck between the two groups in March.

Once the largest shareholder in Meralco, First Holdings had cut its stake to 13.4 percent after selling a 20 percent bloc to the country's largest listed firm, Philippine Long Distance Telephone Co (PLDT).

The move was meant to thwart a looming takeover by San Miguel Corp (SMC.PS) (SMCB.PS), which last year bought a 27 percent stake in Meralco. The purchase was San Miguel's first successful foray into the power sector as Southeast Asia's largest food and drinks group ventured into heavy industry to fuel future growth.

If other opportunities arise that are significantly more attractive than Meralco, then we also have the option to sell down or sell out at significantly higher values than would have been possible if we had opted to engage in a battle of attrition, First Holdings Chairman and Chief Executive Oscar Lopez told shareholders at an annual meeting.

The comments from Lopez, the most senior member of the family, come a day before Meralco's annual shareholders' meeting which many expect to be dominated by a battle for control by the PLDT group, represented by its Chairman Manuel Pangilinan and San Miguel, headed by its President Ramon Ang.

Ang said earlier this month the San Miguel group, along with some business partners, now own 43 percent of Meralco. He did not give further details on the group's additional acquisition.

PLDT's holdings and that of the Lopez clan come up to about 43.5 percent in Meralco, almost the same as San Miguel's.

Last year, Meralco's annual meeting was delayed by 10 hours after state pension fund GSIS attempted to shake up management in a row with the Lopez family over power rates.

GSIS eventually sold its 27 percent stake to San Miguel and the Lopezes retained management control of Meralco.

Lopez said the sale of a 20 percent interest to the PLDT group would allow the holding firm to pay down debt and look at investment opportunities.

It also liberates us from a Catch-22 strategy of having to defend our position in Meralco at all cost, a battle that we could not possibly win under the current domestic political and global financial environment, he told shareholders. (Reporting by Manolo Serapio Jr.; Editing by Rupert Winchester)