Does PS3 have a Dolby Digital and DTS Encoder?

[BozQ]

I have an old PS3 "fat" console and I've been using it as my primary Blu-ray player.

I don't have a HDMI receiver, so I've been playing audio via TOSLINK Optical output, hooked up to a Logitech Z5500.

Recently, I decided to mess around with my PS3 settings and figured I'd try checking only DTS (no Dolby Digital) in my PS3 audio settings and see what happens. And to my surprise, when I load in a Dolby only BD, like the first Transformers (Dolby TrueHD BD), it would play back in DTS, even though the display information showed it was playing Dolby TrueHD.

My question, is the PS3 capable of encoding soundtracks to either Dolby Digital and/or DTS?