Lawyerly

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

From around the time of the issuance of the SEC's May 30, 1990 opinion addressed to Mr. Johnny M. Araneta where the SEC stated that it "decided to do away with the strict application/computation of the so-called 'Grandfather Rule' x x x, and instead appl[y] the so-called 'Control Test'",[98] the SEC "has consistently applied the control test".[99] This is a matter expressly acknowledged by Justice Presbitero J. Velasco in his dissent in Gamboa v. Teves:[100]

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

This court's 2011 decision in Gamboa v. Teves[128] also pertained to the reckoning of foreign equity ownership in a nationalized economic activity (i.e., public utilities). However, it centered on the definition of the term "capital"[129] which was deemed as referring "only to shares of stock entitled to vote in the election of directors."[130]

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

Suppose that a corporation, "C", is engaged in a nationalized activity requiring that 60% of its capital be owned by Filipinos and that this 60% is owned by another corporation, "B", while the remaining 40% is owned by stockholders, collectively referred to as "Y". Y is composed entirely of foreign nationals. As for B, 60% of its capital is owned by stockholders collectively referred to as "A", while the remaining 40% is owned by stockholders collectively referred to as "X". The collective A, is composed entirely of Philippine nationals, while the collective X is composed entirely of foreign nationals. (N.b., in this illustration, capital is understood to mean "shares of stock entitled to vote in the election of directors," per the definition in Gamboa[158]). Thus: A: 60% X: 40%

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

Apart from control (through voting rights), also significant is "beneficial ownership". In the 2011 decision in Gamboa,[161] this court stated: Mere legal title is insufficient to meet the 60 percent Filipino-owned "capital" required in the Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipino nationals in accordance with the constitutional mandate. Otherwise, the corporation is "considered as non-Philippine national[s]."[162]

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

In Gamboa, "[f]ull beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required."[165] With this in mind, the Grandfather Rule may be used as a supplement to the Control Test, that is, as a further check to ensure that control and beneficial ownership of a corporation is in fact lodged in Filipinos.

GR No. 195580

2014-04-21

NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP.

VELASCO JR., J.

Consistent with Gamboa,[167] this examination of equity structures must likewise focus on "capital" understood as "shares of stock entitled to vote in the election of directors."[168]

GR No. 204819

2014-04-08

JAMES M. IMBONG v. PAQUITO N. OCHOA

MENDOZA, J.

Contrary to the respondent's notion, however, these provisions are self-executing. Unless the provisions clearly express the contrary, the provisions of the Constitution should be considered self-executory. There is no need for legislation to implement these self-executing provisions.[182] In Manila Prince Hotel v. GSIS,[183] it was stated: x x x Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of the constitution are self-executing. If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and practically nullify the mandate of the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has always been, that

GR No. 170770

2013-01-09

VITALIANO N. AGUIRRE II v. FQB+7

DEL CASTILLO, J.

The same is true with regard to Vitaliano's shareholdings in the dissolved corporation. A party's stockholdings in a corporation, whether existing or dissolved, is a property right[44] which he may vindicate against another party who has deprived him thereof. The corporation's dissolution does not extinguish such property right. Section 145 of the Corporation Code ensures the protection of this right, thus: Sec. 145. Amendment or repeal. No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof. (Emphases supplied.)

GR Nos. 174457-59

2012-12-05

EXPRESS INVESTMENTS III PRIVATE LTD. v. BAYAN TELECOMMUNICATIONS

VILLARAMA, JR., J.

This provision explicitly reserves to Filipino citizens control over public utilities, pursuant to an overriding economic goal of the 1987 Constitution: to "conserve and develop our patrimony" and ensure "a self-reliant and independent national economy effectively controlled by Filipinos."[94]

GR No. 176579

2012-10-09

HEIRS OF WILSON P. GAMBOA v. FINANCE SECRETARY MARGARITO B. TEVES

CARPIO, J.

The ineffectivity caused by the non-joinder of the indispensable parties, the deprivation of their day in court, and the denial of their right to due process, cannot be cured by the sophistic expedience of naming PLDT in the fallo of the decision as a respondent. The dispositive portion of the June 28, 2011 Decision all the more only highlights the unenforceability of the majority's disposition and serves as an implied admission of this Court's lack of jurisdiction over the persons of PLDT and its foreign stockholders when it did not directly order the latter to dispose the common shares in excess of the 40% limit. Instead, it took the circuitous route of ordering the SEC, in the fallo of the assailed decision, "to apply this definition of the term 'capital' in determining the extent of allowable ownership in respondent PLDT and, if there is a violation of Sec. 11, Art. XII of the Constitution, to impose the appropriate sanctions under the law."[98]

GR No. 176579

2012-10-09

HEIRS OF WILSON P. GAMBOA v. FINANCE SECRETARY MARGARITO B. TEVES

CARPIO, J.

Not content with changing the rule in the middle of the game, the majority, in the June 28, 2011 Decision, went a little further by ordering respondent SEC Chairperson "to apply this definition of the term 'capital' in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law." This may be viewed as unreasonable and arbitrary. The Court in the challenged June 28, 2011 Decision already made a finding that foreigners hold 64.27% of the total number of PLDT common shares while Filipinos hold only 35.73%.[161] In this factual setting, PLDT will, as clear as day, face sanctions since its present capital structure is presently in breach of the rule on the 40% cap on foreign ownership of voting shares even without need of a SEC investigation.

	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
From around the time of the issuance of the SEC's May 30, 1990 opinion addressed to Mr. Johnny M. Araneta where the SEC stated that it "decided to do away with the strict application/computation of the so-called 'Grandfather Rule' x x x, and instead appl[y] the so-called 'Control Test'",[98] the SEC "has consistently applied the control test".[99] This is a matter expressly acknowledged by Justice Presbitero J. Velasco in his dissent in Gamboa v. Teves:[100]
	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
This court's 2011 decision in Gamboa v. Teves[128] also pertained to the reckoning of foreign equity ownership in a nationalized economic activity (i.e., public utilities). However, it centered on the definition of the term "capital"[129] which was deemed as referring "only to shares of stock entitled to vote in the election of directors."[130]
	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
Suppose that a corporation, "C", is engaged in a nationalized activity requiring that 60% of its capital be owned by Filipinos and that this 60% is owned by another corporation, "B", while the remaining 40% is owned by stockholders, collectively referred to as "Y". Y is composed entirely of foreign nationals. As for B, 60% of its capital is owned by stockholders collectively referred to as "A", while the remaining 40% is owned by stockholders collectively referred to as "X". The collective A, is composed entirely of Philippine nationals, while the collective X is composed entirely of foreign nationals. (N.b., in this illustration, capital is understood to mean "shares of stock entitled to vote in the election of directors," per the definition in Gamboa[158]). Thus: A: 60% X: 40%
	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
Apart from control (through voting rights), also significant is "beneficial ownership". In the 2011 decision in Gamboa,[161] this court stated: Mere legal title is insufficient to meet the 60 percent Filipino-owned "capital" required in the Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipino nationals in accordance with the constitutional mandate. Otherwise, the corporation is "considered as non-Philippine national[s]."[162]
	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
In Gamboa, "[f]ull beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required."[165] With this in mind, the Grandfather Rule may be used as a supplement to the Control Test, that is, as a further check to ensure that control and beneficial ownership of a corporation is in fact lodged in Filipinos.
	GR No. 195580 2014-04-21	NARRA NICKEL MINING v. REDMONT CONSOLIDATED MINES CORP. VELASCO JR., J.
Consistent with Gamboa,[167] this examination of equity structures must likewise focus on "capital" understood as "shares of stock entitled to vote in the election of directors."[168]
	GR No. 204819 2014-04-08	JAMES M. IMBONG v. PAQUITO N. OCHOA MENDOZA, J.
Contrary to the respondent's notion, however, these provisions are self-executing. Unless the provisions clearly express the contrary, the provisions of the Constitution should be considered self-executory. There is no need for legislation to implement these self-executing provisions.[182] In Manila Prince Hotel v. GSIS,[183] it was stated: x x x Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of the constitution are self-executing. If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and practically nullify the mandate of the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has always been, that
	GR No. 170770 2013-01-09	VITALIANO N. AGUIRRE II v. FQB+7 DEL CASTILLO, J.
The same is true with regard to Vitaliano's shareholdings in the dissolved corporation. A party's stockholdings in a corporation, whether existing or dissolved, is a property right[44] which he may vindicate against another party who has deprived him thereof. The corporation's dissolution does not extinguish such property right. Section 145 of the Corporation Code ensures the protection of this right, thus: Sec. 145. Amendment or repeal. No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof. (Emphases supplied.)
	GR Nos. 174457-59 2012-12-05	EXPRESS INVESTMENTS III PRIVATE LTD. v. BAYAN TELECOMMUNICATIONS VILLARAMA, JR., J.
This provision explicitly reserves to Filipino citizens control over public utilities, pursuant to an overriding economic goal of the 1987 Constitution: to "conserve and develop our patrimony" and ensure "a self-reliant and independent national economy effectively controlled by Filipinos."[94]
	GR No. 176579 2012-10-09	HEIRS OF WILSON P. GAMBOA v. FINANCE SECRETARY MARGARITO B. TEVES CARPIO, J.
The ineffectivity caused by the non-joinder of the indispensable parties, the deprivation of their day in court, and the denial of their right to due process, cannot be cured by the sophistic expedience of naming PLDT in the fallo of the decision as a respondent. The dispositive portion of the June 28, 2011 Decision all the more only highlights the unenforceability of the majority's disposition and serves as an implied admission of this Court's lack of jurisdiction over the persons of PLDT and its foreign stockholders when it did not directly order the latter to dispose the common shares in excess of the 40% limit. Instead, it took the circuitous route of ordering the SEC, in the fallo of the assailed decision, "to apply this definition of the term 'capital' in determining the extent of allowable ownership in respondent PLDT and, if there is a violation of Sec. 11, Art. XII of the Constitution, to impose the appropriate sanctions under the law."[98]
	GR No. 176579 2012-10-09	HEIRS OF WILSON P. GAMBOA v. FINANCE SECRETARY MARGARITO B. TEVES CARPIO, J.
Not content with changing the rule in the middle of the game, the majority, in the June 28, 2011 Decision, went a little further by ordering respondent SEC Chairperson "to apply this definition of the term 'capital' in determining the extent of allowable foreign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII of the Constitution, to impose the appropriate sanctions under the law." This may be viewed as unreasonable and arbitrary. The Court in the challenged June 28, 2011 Decision already made a finding that foreigners hold 64.27% of the total number of PLDT common shares while Filipinos hold only 35.73%.[161] In this factual setting, PLDT will, as clear as day, face sanctions since its present capital structure is presently in breach of the rule on the 40% cap on foreign ownership of voting shares even without need of a SEC investigation.