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2/9/2017 G.R.No.195580 TodayisThursday,February09,2017

G.R.No.195580

TodayisThursday,February09,2017

2/9/2017 G.R.No.195580 TodayisThursday,February09,2017
2/9/2017 G.R.No.195580 TodayisThursday,February09,2017

NarraNickelMiningandDevelopmentCorp.v.RedmontConsolidatedMines,G.R.No.195580,21April2014

Decision,Velasco[J]

DissentingOpinion,Leonen[J]

RepublicofthePhilippines

SUPREMECOURT

BaguioCity

THIRDDIVISION

G.R.No.195580

April21,2014

NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and MCARTHURMINING,INC.,Petitioners, vs. REDMONTCONSOLIDATEDMINESCORP.,Respondent.

VELASCO,JR.,J.:

DECISION

Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra Nickel and Mining DevelopmentCorp.(Narra),TesoroMiningandDevelopment,Inc.(Tesoro),andMcArthurMiningInc.(McArthur), which seeksto reverse the October 1, 2010 Decision 1 and the February 15, 2011 Resolution of the Court of Appeals(CA).

TheFacts

SometimeinDecember2006,respondentRedmontConsolidatedMinesCorp.(Redmont),adomesticcorporation

organizedandexistingunderPhilippinelaws,tookinterestinminingandexploringcertainareasoftheprovinceof Palawan.AfterinquiringwiththeDepartmentofEnvironmentandNaturalResources(DENR),itlearnedthatthe areas where it wanted to undertake exploration and mining activities where already covered by Mineral ProductionSharingAgreement(MPSA)applicationsofpetitionersNarra,TesoroandMcArthur.

PetitionerMcArthur,throughitspredecessor­in­interestSaraMarieMining,Inc.(SMMI),filedanapplicationforan

MPSAandExplorationPermit(EP)withtheMinesandGeo­SciencesBureau(MGB),RegionIV­B,Officeofthe

DepartmentofEnvironmentandNaturalResources(DENR).

Subsequently, SMMI was issued MPSA­AMA­IVB­153 covering an area of over 1,782 hectares in Barangay Sumbiling, Municipality of Bataraza, Province of Palawan and EPA­IVB­44 which includes an area of 3,720 hectaresin BarangayMalatagao,Bataraza,Palawan.The MPSAand EPwere then transferred to Madridejos MiningCorporation(MMC)and,onNovember6,2006,assignedtopetitionerMcArthur. 2

Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation and Patricia Louise Mining&DevelopmentCorporation(PLMDC)whichpreviouslyfiledanapplicationforanMPSAwiththeMGB,

RegionIV­B,DENRonJanuary6,1992.Throughthesaidapplication,theDENRissuedMPSA­IV­1­12covering

anareaof3.277hectaresinbarangaysCalategasandSanIsidro,MunicipalityofNarra,Palawan.Subsequently,

PLMDC conveyed, transferred and/or assigned its rights and interests over the MPSA application in favor of Narra.

Another MPSA application of SMMI was filed with the DENR Region IV­B, labeled as MPSA­AMA­IVB­154 (formerly EPA­IVB­47) over 3,402 hectares in Barangays Malinao and Princesa Urduja, Municipality of Narra, ProvinceofPalawan.SMMIsubsequentlyconveyed,transferredandassigneditsrightsandinterestoverthesaid MPSAapplicationtoTesoro.

OnJanuary2,2007,RedmontfiledbeforethePanelofArbitrators(POA)oftheDENRthree(3)separatepetitions

forthedenialofpetitioners’applicationsforMPSAdesignatedasAMA­IVB­153,AMA­IVB­154andMPSAIV­1­12.

Inthepetitions,Redmontallegedthatatleast60%ofthecapitalstockofMcArthur,TesoroandNarraareowned

andcontrolledbyMBMIResources,Inc.(MBMI),a100%Canadiancorporation.Redmontreasonedthatsince

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MBMIisaconsiderablestockholderofpetitioners,itwasthedrivingforcebehindpetitioners’filingoftheMPSAs over the areas covered by applications since it knows that it can only participate in mining activities through corporationswhicharedeemedFilipinocitizens.Redmontarguedthatgiventhatpetitioners’capitalstockswere mostlyownedbyMBMI,theywerelikewisedisqualifiedfromengaginginminingactivitiesthroughMPSAs,which arereservedonlyforFilipinocitizens.

IntheirAnswers,petitionersaverredthattheywerequalifiedpersonsunderSection3(aq)ofRepublicActNo.

(RA)7942orthePhilippineMiningActof1995whichprovided:

Sec.3DefinitionofTerms.AsusedinandforpurposesofthisAct,thefollowingterms,whetherinsingularor

plural,shallmean:

xxxx

(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose of engaging in mining, with technicalandfinancialcapabilitytoundertakemineralresourcesdevelopmentanddulyregisteredinaccordance

withlawatleastsixtypercent(60%)ofthecapitalofwhichisownedbycitizensofthePhilippines:Provided,That

alegallyorganizedforeign­ownedcorporationshallbedeemedaqualifiedpersonforpurposesofgrantingan

explorationpermit,financialortechnicalassistanceagreementormineralprocessingpermit.

Additionally,theystatedthattheirnationalityasapplicantsisimmaterialbecausetheyalsoappliedforFinancialor TechnicalAssistance Agreements(FTAA) denominated asAFTA­IVB­09 for McArthur, AFTA­IVB­08 for Tesoro

andAFTA­IVB­07forNarra,whicharegrantedtoforeign­ownedcorporations.Nevertheless,theyclaimedthatthe

issueonnationalityshouldnotberaisedsinceMcArthur,TesoroandNarraareinfactPhilippineNationalsas60%

oftheircapitalisownedbycitizensofthePhilippines.TheyassertedthatthoughMBMIowns40%ofthesharesof

PLMC(whichowns5,997sharesofNarra), 3 40%ofthesharesofMMC(whichowns5,997sharesofMcArthur) 4 and40%ofthesharesofSLMC(which,inturn,owns5,997sharesofTesoro), 5 thesharesofMBMIwillnotmake ittheowner ofatleast60%ofthecapitalstockofeachofpetitioners.Theyaddedthatthebesttoolusedin

determiningthenationalityofacorporationisthe"controltest,"embodiedinSec.3ofRA7042ortheForeign

InvestmentsActof1991.TheyalsoclaimedthatthePOAofDENRdidnothavejurisdictionovertheissuesin

Redmont’spetitionsincetheyarenotenumeratedinSec.77ofRA7942.Finally,theystressedthatRedmonthas

no personality to sue them because it has no pending claim or application over the areas applied for by petitioners.

OnDecember14,2007,thePOAissuedaResolutiondisqualifyingpetitionersfromgainingMPSAs.Itheld:

[I]tisclearlyestablishedthatrespondentsarenotqualifiedapplicantstoengageinminingactivities.Ontheother hand, [Redmont] having filed its own applications for an EPA over the areas earlier covered by the MPSA applicationofrespondentsmaybeconsideredifandwhentheyarequalifiedunderthelaw.Theviolationofthe requirements for the issuance and/or grant of permits over mining areas is clearly established thus, there is reasontobelievethatthecancellationand/orrevocationofpermitsalreadyissuedunderthepremisesisinorder andopentheareascoveredtootherqualifiedapplicants.

xxxx

WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur Mining Inc., Tesoro Mining and Development,Inc.,andNarraNickelMiningandDevelopmentCorp.as,DISQUALIFIEDforbeingconsideredas ForeignCorporations.TheirMineralProductionSharingAgreement(MPSA)areherebyxxxDECLAREDNULL ANDVOID. 6

ThePOAconsideredpetitionersasforeigncorporationsbeing"effectivelycontrolled"byMBMI,a100%Canadian

companyanddeclaredtheirMPSAsnullandvoid.InthesameResolution,itgaveduecoursetoRedmont’sEPAs. Thereafter, on February 7, 2008, the POAissued an Order 7 denying the Motion for Reconsideration filed by petitioners.

Aggrieved by the Resolution and Order of the POA, McArthur and Tesoro filed a joint Notice of Appeal 8 and Memorandum of Appeal 9 with the Mines Adjudication Board (MAB) while Narra separately filed its Notice of Appeal 10 andMemorandumofAppeal. 11

In their respective memorandum, petitioners emphasized that they are qualified persons under the law. Also, throughaletter,theyinformedtheMABthattheyhadtheir individualMPSAapplicationsconvertedtoFTAAs. McArthur’s FTAA was denominated as AFTA­IVB­09 12 on May 2007, while Tesoro’s MPSA application was convertedtoAFTA­IVB­08 13 onMay28,2007,andNarra’sFTAAwasconvertedtoAFTA­IVB­07 14 onMarch30,

2006.

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Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a Complaint 15 with the Securities and Exchange Commission (SEC), seeking the revocation of the certificates for registration of petitionersonthegroundthattheyareforeign­ownedorcontrolledcorporationsengagedinmininginviolationof Philippine laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and Motion to Suspend Proceeding before the MABpraying for the suspension of the proceedings on the appeals filed by McArthur, TesoroandNarra.

Subsequently,onSeptember8,2008,RedmontfiledbeforetheRegionalTrialCourtofQuezonCity,Branch92

(RTC)aComplaint 16 forinjunctionwithapplicationforissuanceofatemporaryrestrainingorder(TRO)and/orwrit of preliminary injunction, docketed as Civil Case No. 08­63379. Redmont prayed for the deferral of the MAB proceedingspendingtheresolutionoftheComplaintbeforetheSEC.

ButbeforetheRTCcanresolveRedmont’sComplaintandapplicationsforinjunctivereliefs,theMABissuedan

OrderonSeptember10,2008,findingtheappealmeritorious.Itheld:

WHEREFORE,inviewoftheforegoing,theMinesAdjudicationBoardherebyREVERSESandSETSASIDEthe

Resolutiondated14December2007ofthePanelofArbitratorsofRegionIV­B(MIMAROPA)inPOA­DENRCase

Nos. 2001­01, 2007­02 and 2007­03, and its Order dated 07 February 2008 denying the Motions for

ReconsiderationoftheAppellants.ThePetitionfiledbyRedmontConsolidatedMinesCorporationon02January

2007isherebyorderedDISMISSED. 17

Belatedly,onSeptember 16,2008,theRTCissuedanOrder 18 granting Redmont’sapplication for a TROand

settingthecaseforhearingtheprayerfortheissuanceofawritofpreliminaryinjunctiononSeptember19,2008.

Meanwhile,onSeptember22,2008,RedmontfiledaMotionforReconsideration 19 oftheSeptember10,2008 OrderoftheMAB.Subsequently,itfiledaSupplementalMotionforReconsideration 20 onSeptember29,2008.

Before the MAB could resolve Redmont’s Motion for Reconsideration and Supplemental Motion for Reconsideration,RedmontfiledbeforetheRTCaSupplementalComplaint 21 inCivilCaseNo.08­63379.

OnOctober6,2008,theRTCissuedanOrder 22 grantingtheissuanceofawritofpreliminaryinjunctionenjoining the MAB from finally disposing of the appeals of petitioners and from resolving Redmont’s Motion for

ReconsiderationandSupplementMotionforReconsiderationoftheMAB’sSeptember10,2008Resolution.

OnJuly1,2009,however,theMABissuedasecondOrderdenyingRedmont’sMotionforReconsiderationand

SupplementalMotionforReconsiderationandresolvingtheappealsfiledbypetitioners.

Hence, the petition for review filed by Redmont before the CA, assailing the Orders issued by the MAB. On

October1,2010,theCArenderedaDecision,thedispositiveofwhichreads:

WHEREFORE,thePetitionisPARTIALLYGRANTED.TheassailedOrders,datedSeptember10,2008andJuly1,

2009oftheMiningAdjudicationBoardarereversedandsetaside.ThefindingsofthePanelofArbitratorsofthe

Department of Environment and NaturalResources that respondents McArthur, Tesoro and Narra are foreign corporationsisupheldand,therefore,therejectionoftheirapplicationsforMineralProductSharingAgreement shouldberecommendedtotheSecretaryoftheDENR.

WithrespecttotheapplicationsofrespondentsMcArthur,TesoroandNarraforFinancialorTechnicalAssistance

Agreement(FTAA)orconversionoftheirMPSAapplicationstoFTAA,thematterforitsrejectionorapprovalisleft

fordeterminationbytheSecretaryoftheDENRandthePresidentoftheRepublicofthePhilippines.

SOORDERED. 23

InaResolutiondatedFebruary15,2011,theCAdeniedtheMotionforReconsiderationfiledbypetitioners.

Afteracarefulreviewoftherecords,theCAfoundthattherewasdoubtastothenationalityofpetitionerswhenit realized that petitioners had a common major investor, MBMI, a corporation composed of 100% Canadians.

Pursuanttothefirstsentenceofparagraph7ofDepartmentofJustice(DOJ)OpinionNo.020,Seriesof2005,

adoptingthe1967SECRuleswhichimplementedtherequirementoftheConstitutionandotherlawspertainingto

theexploitationofnaturalresources,theCAusedthe"grandfatherrule"todeterminethenationalityofpetitioners.

Itprovided:

Sharesbelongingtocorporationsorpartnershipsatleast60%ofthecapitalofwhichisownedbyFilipinocitizens

shallbeconsideredasofPhilippinenationality,butifthepercentageofFilipinoownershipinthecorporationor

partnershipislessthan60%,onlythenumberofsharescorrespondingtosuchpercentageshallbecountedasof

Philippinenationality.Thus,if100,000sharesareregisteredinthenameofacorporationorpartnershipatleast

60%ofthe capitalstockor capital,respectively,ofwhich belong to Filipino citizens,allofthe sharesshallbe

recordedasownedbyFilipinos.Butiflessthan60%,orsay,50%ofthecapitalstockorcapitalofthecorporation

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or partnership,respectively,belongstoFilipinocitizens,only50,000sharesshallberecordedasbelongingto aliens. 24 (emphasissupplied)

Indeterminingthenationalityofpetitioners,theCAlookedintotheircorporatestructuresandtheircorresponding commonshareholders.Usingthegrandfatherrule,theCAdiscoveredthatMBMIineffectownedmajorityofthe common stocks of the petitioners as well as at least 60% equity interest of other majority shareholders of petitionersthroughjointventureagreements.TheCAfoundthatthrougha"webofcorporatelayering,itisclear thatonecommoncontrollinginvestorinallminingcorporationsinvolvedxxxisMBMI." 25 Thus,itconcludedthat petitionersMcArthur,TesoroandNarraarealsoinpartnershipwith,orprivies­in­interestof,MBMI.

Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into FTAA applications suspiciousinnatureand,asaconsequence,itrecommendedtherejectionofpetitioners’MPSAapplicationsby theSecretaryoftheDENR.

With regard to the settlement of disputes over rights to mining areas, the CA pointed out that the POA has jurisdictionoverthemandthatitalsohasthepowertodeterminetheofnationalityofpetitionersasaprerequisite oftheConstitutionpriortheconferringofrightsto"co­production,jointventureorproduction­sharingagreements" ofthestatetominingrights.However,italsostatedthatthePOA’sjurisdictionislimitedonlytotheresolutionof thedisputeandnotontheapprovalorrejectionoftheMPSAs.ItstipulatedthatonlytheSecretaryoftheDENRis vestedwiththepowertoapproveorrejectapplicationsforMPSA.

Finally,theCAupheldthefindingsofthePOAinitsDecember14,2007Resolutionwhichconsideredpetitioners

McArthur,TesoroandNarraasforeigncorporations.Nevertheless,theCAdeterminedthatthePOA’sdeclaration

thattheMPSAsofMcArthur,TesoroandNarraarevoidishighlyimproper.

WhilethepetitionwaspendingwiththeCA,RedmontfiledwiththeOfficeofthePresident(OP)apetitiondated May 7, 2010 seeking the cancellation of petitioners’ FTAAs. The OPrendered a Decision 26 on April 6, 2011, whereinitcanceledandrevokedpetitioners’FTAAsforviolatingandcircumventingthe"Constitutionxxx[,]the

SmallScaleMiningLawandEnvironmentalComplianceCertificateaswellasSections3and8oftheForeign

InvestmentActandE.O.584." 27 TheOP,inaffirmingthecancellationoftheissuedFTAAs,agreedwithRedmont statingthatpetitionerscommittedviolationsagainsttheabovementionedlawsandfailedtosubmitevidenceto negate them.The Decision further quoted the December 14,2007 Order ofthe POAfocusing on the alleged misrepresentationandclaimsmadebypetitionersofbeingdomesticor Filipinocorporationsandtheadmitted continuedminingoperationofPMDCusingtheirlocallysecuredSmallScaleMiningPermitinsidetheareaearlier applied for an MPSA application which was eventually transferred to Narra. It also agreed with the POA’s estimationthatthefilingoftheFTAAapplicationsbypetitionersisaclearadmissionthattheyare"notcapableof conductingalargescaleminingoperationandthattheyneedthefinancialandtechnicalassistanceofaforeign entityintheiroperation,thatiswhytheysoughttheparticipationofMBMIResources,Inc." 28 TheDecisionfurther quoted:

The filing of the FTAAapplication on June 15, 2007, during the pendency of the case only demonstrate the violationsand lackofqualification ofthe respondentcorporationsto engage in mining.The filing ofthe FTAA applicationconversionwhichisallowedforeigncorporationoftheearlierMPSAisanadmissionthatindeedthe respondentisnotFilipinobutratherofforeignnationalitywhoisdisqualifiedunderthelaws.Corporatedocuments of MBMI Resources, Inc. furnished its stockholders in their head office in Canada suggest that they are conductingoperationonlythroughtheirlocalcounterparts. 29

TheMotionforReconsiderationoftheDecisionwasfurtherdeniedbytheOPinaResolution 30 datedJuly6,2011. PetitionersthenfiledaPetitionforReviewonCertiorarioftheOP’sDecisionandResolutionwiththeCA,docketed as CA­G.R. SPNo. 120409. In the CADecision dated February 29, 2012, the CAaffirmed the Decision and ResolutionoftheOP.Thereafter,petitionersappealedthesameCAdecisiontothisCourtwhichisnowpending withadifferentdivision.

Thus, the instant petition for reviewagainst the October 1, 2010 Decision of the CA. Petitionersput forth the followingerrorsoftheCA:

I.

TheCourtofAppealserredwhenitdidnotdismissthecaseformootnessdespitethefactthatthesubject

matterofthecontroversy,theMPSAApplications,havealreadybeenconvertedintoFTAAapplicationsand

thatthesamehavealreadybeengranted.

II.

TheCourtofAppealserredwhenitdidnotdismissthecasefor lackofjurisdictionconsideringthatthe PanelofArbitratorshasnojurisdictiontodeterminethenationalityofNarra,TesoroandMcArthur.

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III.

The Court of Appeals erred when it did not dismiss the case on account of Redmont’s willful forum shopping.

IV.

The Court of Appeals’ ruling that Narra, Tesoro and McArthur are foreign corporations based on the "GrandfatherRule"iscontrarytolaw,particularlytheexpressmandateoftheForeignInvestmentsActof

1991,asamended,andtheFIARules.

V.

TheCourtofAppealserredwhenitappliedtheexceptionstotheresinteraliosactarule.

VI.

The Court of Appealserred when it concluded that the conversion of the MPSAApplicationsinto FTAA Applicationswereof"suspiciousnature"asthesameisbasedonmereconjecturesandsurmiseswithout anyshredofevidencetoshowthesame. 31

Wefindthepetitiontobewithoutmerit.

Thiscasenotmootandacademic

TheclaimofpetitionersthattheCAerredinnotrenderingtheinstantcaseasmootiswithoutmerit.

Basically,acaseissaidtobemootand/oracademicwhenit"ceasestopresentajusticiablecontroversybyvirtue ofsuperveningevents,sothatadeclarationthereonwouldbeofnopracticaluseorvalue." 32 Thus,thecourts "generallydeclinejurisdictionoverthecaseordismissitonthegroundofmootness." 33

The "mootness" principle, however, does accept certain exceptions and the mere raising of an issue of "mootness" will not deter the courts from trying a case when there is a valid reason to do so. In David v. Macapagal­Arroyo(David),theCourtprovidedfourinstanceswherecourtscandecideanotherwisemootcase, thus:

1.)ThereisagraveviolationoftheConstitution;

2.)Theexceptionalcharacterofthesituationandparamountpublicinterestisinvolved;

3.)Whenconstitutionalissueraisedrequiresformulationofcontrollingprinciplestoguidethebench,the

bar,andthepublic;and

4.)Thecaseiscapableofrepetitionyetevadingreview. 34

Alloftheexceptionsstatedabovearepresentintheinstantcase.WeofthisCourtnotethatagraveviolationof

theConstitution,specificallySection2ofArticleXII,isbeingcommittedbyaforeigncorporationrightunderour

country’s nose through a myriad of corporate layering under different, allegedly, Filipino corporations. The intricate corporate layering utilized bythe Canadian company, MBMI, isof exceptionalcharacter and involves paramount public interest since it undeniably affects the exploitation of our Country’s natural resources. The correspondingactionsofpetitionersduringthelifetimeandexistenceoftheinstantcaseraisequestionsaswhat principleistobeappliedtocaseswithsimilarissues.Nodefiniterulingonsuchprinciplehasbeenpronouncedby theCourt;hence,thedispositionoftheissuesorerrorsintheinstantcasewillserveasaguide"tothebench,the bar andthepublic." 35 Finally,the instantcase iscapable ofrepetition yetevading review,since the Canadian company, MBMI, can keep on utilizing dummy Filipino corporations through various schemes of corporate layeringandconversionofapplicationstoskirttheconstitutionalprohibitionagainstforeignmininginPhilippine soil.

ConversionofMPSAapplicationstoFTAAapplications

Weshalldiscussthefirsterrorinconjunctionwiththesixtherrorpresentedbypetitionerssincebothinvolvethe

conversionofMPSAapplicationstoFTAAapplications.PetitionerspropoundthattheCAerredinrulingagainst

themsincethequestionedMPSAapplicationswerealreadyconvertedintoFTAAapplications;thus,theissueon

theprohibitionrelatingtoMPSAapplicationsofforeignminingcorporationsisacademic.Also,petitionerswould

wantustocorrecttheCA’sfindingwhichdeemedtheaforementionedconversionsofapplicationsassuspiciousin

nature,sinceitisbasedonmereconjecturesandsurmisesandnotsupportedwithevidence.

Wedisagree.

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TheCA’sanalysisoftheactionsofpetitionersafterthecasewasfiledagainstthembyrespondentisonpoint.The changingofapplicationsbypetitionersfromonetypetoanotherjustbecauseacasewasfiledagainstthem,in truth,wouldraisenotafewsceptics’eyebrows.Whatisthereasonforsuchconversion?Didthesaidconversion not stem from the case challenging their citizenship and to have the case dismissed against them for being "moot"?Itisquiteobviousthatitispetitioners’strategytohavethecasedismissedagainstthemforbeing"moot."

Considerthehistoryofthiscaseandhowpetitionersrespondedtoeveryactiondonebythecourtorappropriate government agency: on January 2, 2007, Redmont filed three separate petitions for denial of the MPSA applications of petitioners before the POA. On June 15, 2007, petitioners filed a conversion of their MPSA applications to FTAAs. The POA, in its December 14, 2007 Resolution, observed this suspect change of applicationswhilethecasewaspendingbeforeitandheld:

The filing of the Financial or Technical Assistance Agreement application is a clear admission that the respondentsarenotcapableofconductingalargescaleminingoperationandthattheyneedthefinancialand technical assistance of a foreign entity in their operation that is why they sought the participation of MBMI Resources,Inc.TheparticipationofMBMIinthecorporationonlyprovesthefactthatitistheCanadiancompany thatwillprovidethefinancesandtheresourcestooperatetheminingareasforthegreaterbenefitandinterestof thesameandnottheFilipinostockholderswhoonlyhavealesssubstantialfinancialstakeinthecorporation.

xxxx

xxxThefilingoftheFTAAapplicationonJune15,2007,duringthependencyofthecaseonlydemonstratethe

violationsand lackofqualification ofthe respondentcorporationsto engage in mining.The filing ofthe FTAA applicationconversionwhichisallowedforeigncorporationoftheearlierMPSAisanadmissionthatindeedthe respondentisnotFilipinobutratherofforeignnationalitywhoisdisqualifiedunderthelaws.Corporatedocuments of MBMI Resources, Inc. furnished its stockholders in their head office in Canada suggest that they are conductingoperationonlythroughtheirlocalcounterparts. 36

OnOctober1,2010,theCArenderedaDecisionwhichpartiallygrantedthepetition,reversingandsettingaside

theSeptember10,2008andJuly1,2009OrdersoftheMAB.InthesaidDecision,theCAupheldthefindingsof

thePOAoftheDENRthatthehereinpetitionersareinfactforeigncorporationsthusarecommendationofthe rejectionoftheirMPSAapplicationswererecommendedtotheSecretaryoftheDENR.WithrespecttotheFTAA applicationsorconversionoftheMPSAapplicationstoFTAAs,theCAdeferredthematterforthedeterminationof theSecretaryoftheDENRandthePresidentoftheRepublicofthePhilippines. 37

IntheirMotionforReconsiderationdatedOctober26,2010,petitionersprayedforthedismissalofthepetition

assertingthatonApril5,2010,thenPresidentGloriaMacapagal­ArroyosignedandissuedintheirfavorFTAANo.

05­2010­IVB,whichrenderedthepetitionmootandacademic.However,theCA,inaResolutiondatedFebruary

15, 2011 denied their motion for being a mere "rehash of their claims and defenses." 38 Standing firm on its

Decision,theCAaffirmedtherulingthatpetitionersare,infact,foreigncorporations.OnApril5,2011,petitioners

elevatedthecasetousviaaPetitionforReviewonCertiorariunderRule45,questioningtheDecisionoftheCA.

Interestingly, the OP rendered a Decision dated April 6, 2011, a day after this petition for review was filed, cancelling and revoking the FTAAs, quoting the Order of the POA and stating that petitioners are foreign corporations since they needed the financial strength of MBMI, Inc. in order to conduct large scale mining operations.TheOPDecisionalsobasedthecancellationonthemisrepresentationoffactsandtheviolationofthe

"SmallScaleMiningLawandEnvironmentalComplianceCertificateaswellasSections3and8oftheForeign

Investment Act and E.O. 584." 39 On July 6, 2011, the OP issued a Resolution, denying the Motion for Reconsiderationfiledbythepetitioners.

RespondentRedmont,initsCommentdatedOctober10,2011,madeknowntotheCourtthefactoftheOP’s

DecisionandResolution.IntheirReply,petitionerschosetoignoretheOPDecisionandcontinuedtoreusetheir old arguments claiming that they were granted FTAAs and, thus, the case was moot. Petitioners filed a ManifestationandSubmissiondatedOctober19,2012, 40 whereintheyassertedthatthepresentpetitionismoot since, in a remarkable turn of events, MBMI was able to sell/assign all its shares/interest in the "holding companies" to DMCI Mining Corporation (DMCI), a Filipino corporation and, in effect, making their respective corporationsfully­Filipinoowned.

Again,itisquiteevidentthatpetitionershavebeentryingtohavethiscasedismissedforbeing"moot."Theirfinal act, wherein MBMI was able to allegedly sell/assign all its shares and interest in the petitioner "holding companies" to DMCI, only proves that they were in fact not Filipino corporations from the start. The recent divestingofinterestbyMBMIwillnotchangethestandofthisCourtwithrespecttothenationalityofpetitioners prior the suspicious change in their corporate structures. The new documents filed by petitioners are factual evidencethatthisCourthasnopowertoverify.

TheonlythingclearandprovedinthisCourtisthefactthattheOPdeclaredthatpetitionercorporationshave violated severalmining lawsand made misrepresentationsand falsehood in their applicationsfor FTAAwhich leadtotherevocationofthesaidFTAAs,demonstratingthatpetitionersarenotbeyondgoingagainstoraround

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thelawusingshiftyactionsandstrategies.Thus,inthisinstance,wecansaythattheirclaimofmootnessismoot

initselfbecausetheirdefenseofconversionofMPSAstoFTAAshasbeendiscreditedbytheOPDecision.

Grandfathertest

Themainissueinthiscaseiscenteredontheissueofpetitioners’nationality,whetherFilipinoorforeign.Intheir previouspetitions,theyhadbeenadamantininsistingthattheywereFilipinocorporations,untiltheysubmitted

theirManifestationandSubmissiondatedOctober19,2012wheretheystatedtheallegedchangeofcorporate

ownership to reflect their Filipino ownership. Thus, there is a need to determine the nationality of petitioner corporations.

Basically,therearetwoacknowledgedtestsindeterminingthenationalityofacorporation:thecontroltestandthe grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the controlling interests in enterprisesengagedintheexploitationofnaturalresourcesownedbyFilipinocitizens,provides:

Sharesbelongingtocorporationsorpartnershipsatleast60%ofthecapitalofwhichisownedbyFilipinocitizens

shallbeconsideredasofPhilippinenationality,butifthepercentageofFilipinoownershipinthecorporationor

partnershipislessthan60%,onlythenumberofsharescorrespondingtosuchpercentageshallbecountedasof

Philippinenationality.Thus,if100,000sharesareregisteredinthenameofacorporationorpartnershipatleast

60%ofthe capitalstockor capital,respectively,ofwhich belong to Filipino citizens,allofthe sharesshallbe

recordedasownedbyFilipinos.Butiflessthan60%,orsay,50%ofthecapitalstockorcapitalofthecorporation

or partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall be counted as owned by

Filipinosandtheother50,000shallberecordedasbelongingtoaliens.

Thefirstpartofparagraph7,DOJOpinionNo.020,stating"sharesbelongingtocorporationsorpartnershipsat

least60%ofthecapitalofwhichisownedbyFilipinocitizensshallbeconsideredasofPhilippinenationality,"

pertains to the controltest or the liberalrule. On the other hand, the second part of the DOJ Opinion which

provides,"ifthepercentageoftheFilipinoownershipinthecorporationorpartnershipislessthan60%,onlythe

numberofsharescorrespondingtosuchpercentageshallbecountedasPhilippinenationality,"pertainstothe

stricter,morestringentgrandfatherrule.

Priortothisrecentchangeofevents,petitionerswereconstantinadvocatingtheapplicationofthe"controltest"

underRA7042,asamendedbyRA8179,otherwiseknownastheForeignInvestmentsAct(FIA),ratherthan

usingthestrictergrandfatherrule.ThepertinentprovisionunderSec.3oftheFIAprovides:

SECTION3.Definitions.­AsusedinthisAct:

a.)ThetermPhilippinenationalshallmeanacitizenofthePhilippines;oradomesticpartnershiporassociation whollyownedbythecitizensofthePhilippines;acorporationorganizedunderthelawsofthePhilippinesofwhich

atleastsixtypercent(60%)ofthecapitalstockoutstandingandentitledtovoteiswhollyownedbyFilipinosora

trusteeoffundsforpensionorotheremployeeretirementorseparationbenefits,wherethetrusteeisaPhilippine

nationalandatleastsixtypercent(60%)ofthefundwillaccruetothebenefitofPhilippinenationals:Provided,

Thatwereacorporationanditsnon­FilipinostockholdersownstocksinaSecuritiesandExchangeCommission

(SEC)registeredenterprise,atleastsixtypercent(60%)ofthecapitalstockoutstandingandentitledtovoteof

eachofbothcorporationsmustbeownedandheldbycitizensofthePhilippinesandatleastsixtypercent(60%)

ofthemembersoftheBoardofDirectors,inorderthatthecorporationshallbeconsideredaPhilippinenational.

(emphasissupplied)

Thegrandfatherrule,petitionersreasoned,hasnolegtostandonintheinstantcasesincethedefinitionofa

"PhilippineNational"underSec.3oftheFIAdoesnotprovideforit.Theyfurtherclaimthatthegrandfatherrule

"hasbeenabandonedandisnolongertheapplicablerule." 41 TheyalsoopinedthatthelastportionofSec.3of theFIAadmitstheapplicationofa"corporatelayering"schemeofcorporations.Petitionersclaimthattheclear andunambiguouswordingsofthestatuteprecludethecourtfromconstruingitandpreventthecourt’suseof discretioninapplyingthelaw.Theysaidthattheplain,literalmeaningofthestatutemeanttheapplicationofthe controltestisobligatory.

Wedisagree."Corporatelayering"isadmittedlyallowedbytheFIA;butifitisusedtocircumventtheConstitution

andpertinentlaws,thenitbecomesillegal.Further,thepronouncementofpetitionersthatthegrandfatherrule

hasalreadybeenabandonedmustbediscreditedforlackofbasis.

Art.XII,Sec.2oftheConstitutionprovides:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potentialenergy,fisheries,forestsortimber,wildlife,floraandfauna,andothernaturalresourcesareownedby the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration,development,andutilizationofnaturalresourcesshallbeunderthefullcontrolandsupervisionofthe

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G.R.No.195580

State. The State may directly undertake such activities, or it may enter into co­production, joint venture or production­sharingagreementswithFilipinocitizens,orcorporationsorassociationsatleastsixtypercentumof whosecapitalisownedbysuchcitizens.Suchagreementsmaybeforaperiodnotexceedingtwenty­fiveyears, renewablefornotmorethantwenty­fiveyears,andundersuchtermsandconditionsasmaybeprovidedbylaw.

xxxx

ThePresidentmayenterintoagreementswithForeign­ownedcorporationsinvolvingeithertechnicalorfinancial assistanceforlarge­scaleexploration,development,andutilizationofminerals,petroleum,andothermineraloils according to the general terms and conditions provided by law, based on real contributions to the economic growthandgeneralwelfareofthecountry.Insuchagreements,theStateshallpromotethedevelopmentanduse oflocalscientificandtechnicalresources.(emphasissupplied)

TheemphasizedportionofSec.2whichfocusesontheStateenteringintodifferenttypesofagreementsforthe

exploration,development,and utilization ofnaturalresourceswith entitieswho are deemed Filipino due to 60 percent ownership of capital is pertinent to this case, since the issues are centered on the utilization of our country’snaturalresourcesorspecifically,mining.Thus,thereisaneedtoascertainthenationalityofpetitioners

since,astheConstitutionsoprovides,suchagreementsareonlyallowedcorporationsorassociations"atleast60

percentofsuchcapitalisownedbysuchcitizens."ThedeliberationsintheRecordsofthe1986Constitutional

Commissionshedlightonhowacitizenshipofacorporationwillbedetermined:

Mr. BENNAGEN: Did I hear right that the Chairman’s interpretation of an independent national economy is freedomfromundueforeigncontrol?Whatisthemeaningofundueforeigncontrol?

MR.VILLEGAS:Undueforeigncontrolisforeigncontrolwhichsacrificesnationalsovereigntyandthewelfareof

theFilipinointheeconomicsphere.

MR.BENNAGEN:Whydoesithave to be qualified stillwith the word "undue"? Whynotsimplyfreedom from foreigncontrol?Ithinkthatisthemeaningofindependence,becauseasphrased,itstillallowsforforeigncontrol.

MR.VILLEGAS:Itwillnowdependontheinterpretationbecauseif,forexample,weretainthe60/40possibilityin

thecultivationofnaturalresources,40percentinvolvessomecontrol;nottotalcontrol,butsomecontrol.

MR.BENNAGEN:Inanycase,Ithinkinduetimewewillproposesomeamendments.

MR.VILLEGAS:Yes.Butwewillbeopentoimprovementofthephraseology.

Mr.BENNAGEN:Yes.

Thankyou,Mr.Vice­President.

xxxx

MR.NOLLEDO:InSections3,9and15,theCommitteestatedlocalorFilipinoequityandforeignequity;namely,

60­40inSection3,60­40inSection9,and2/3­1/3inSection15.

MR.VILLEGAS:Thatisright.

MR. NOLLEDO: In teaching law, we are always faced with the question: ‘Where do we base the equity requirement,isitontheauthorizedcapitalstock,onthesubscribedcapitalstock,oronthepaid­upcapitalstock ofacorporation’?WilltheCommitteepleaseenlightenmeonthis?

MR.VILLEGAS:WehavejusthadalongdiscussionwiththemembersoftheteamfromtheUPLawCenterwho

provideduswithadraft.ThephrasethatiscontainedherewhichweadoptedfromtheUPdraftis‘60percentof

thevotingstock.’

MR.NOLLEDO:Thatmustbebasedonthesubscribedcapitalstock,becauseunlessdeclareddelinquent,unpaid

capitalstockshallbeentitledtovote.

MR.VILLEGAS:Thatisright.

MR.NOLLEDO:Thankyou.

Withrespecttoaninvestmentbyonecorporationinanothercorporation,say,acorporationwith60­40percent

equityinvestsinanothercorporationwhichispermittedbytheCorporationCode,doestheCommitteeadoptthe

grandfatherrule?

MR.VILLEGAS:Yes,thatistheunderstandingoftheCommittee.

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G.R.No.195580

MR.NOLLEDO:Therefore,weneedadditionalFilipinocapital?

MR.VILLEGAS:Yes. 42 (emphasissupplied)

ItisapparentthatitistheintentionoftheframersoftheConstitutiontoapplythegrandfatherruleincaseswhere

corporatelayeringispresent.

Elementary in statutory construction is when there is conflict between the Constitution and a statute, the Constitutionwillprevail.Inthisinstance,specificallypertainingtotheprovisionsunderArt.XIIoftheConstitution on National Economy and Patrimony, Sec. 3 of the FIAwill have no place of application. As decreed by the honorableframersofourConstitution,thegrandfatherruleprevailsandmustbeapplied.

Likewise,paragraph7,DOJOpinionNo.020,Seriesof2005provides:

The above­quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation for purposes, among others, of determining compliance with nationalityrequirements(the ‘Investee Corporation’). SuchmannerofcomputationisnecessarysincethesharesintheInvesteeCorporationmaybeownedbothby individual stockholders (‘Investing Individuals’) and by corporations and partnerships (‘Investing Corporation’). The said rules thus provide for the determination of nationality depending on the ownership of the Investee Corporationand,incertaininstances,theInvestingCorporation.

Under the above­quoted SEC Rules, there are two cases in determining the nationality of the Investee

Corporation.Thefirstcaseisthe‘liberalrule’,latercoinedbytheSECastheControlTestinits30May1990

Opinion,andpertainstotheportioninsaidParagraph7ofthe1967SECRuleswhichstates,‘(s)haresbelonging

to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality.’ Under the liberal Control Test, there is no need to further trace the

ownershipofthe60%(ormore)FilipinostockholdingsoftheInvestingCorporationsinceacorporationwhichisat

least60%Filipino­ownedisconsideredasFilipino.

ThesecondcaseistheStrictRuleortheGrandfatherRuleProperandpertainstotheportioninsaidParagraph7

ofthe1967SECRuleswhichstates,"butifthepercentageofFilipinoownershipinthecorporationorpartnership

islessthan60%,onlythenumberofsharescorrespondingtosuchpercentageshallbecountedasofPhilippine

nationality."UndertheStrictRuleorGrandfatherRuleProper,thecombinedtotalsintheInvestingCorporation

andtheInvesteeCorporationmustbetraced(i.e.,"grandfathered")todeterminethetotalpercentageofFilipino

ownership.

Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing CorporationandaddedtothesharesdirectlyownedintheInvesteeCorporationxxx.

xxxx

Inotherwords,basedonthesaidSECRuleandDOJOpinion,theGrandfatherRuleorthesecondpartofthe

SECRuleappliesonlywhenthe60­40Filipino­foreignequityownershipisindoubt(i.e.,incaseswherethejoint

venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%]

investsinotherjointventurecorporationwhichiseither60­40%Filipino­alienorthe59%lessFilipino).Stated

differently,wherethe60­40Filipino­foreignequityownershipisnotindoubt,theGrandfatherRulewillnotapply.

(emphasissupplied)

Afterascrutinyoftheevidenceextantonrecord,theCourtfindsthatthiscasecallsfortheapplicationofthe grandfatherrulesince,asruledbythePOAandaffirmedbytheOP,doubtprevailsandpersistsinthecorporate ownership ofpetitioners.Also,asfound bythe CA,doubtispresentin the 60­40 Filipino equityownership of

petitionersNarra,McArthurandTesoro,sincetheircommoninvestor,the100%Canadiancorporation––MBMI,

fundedthem.However,petitionersalsoclaimthatthereis"doubt"onlywhenthestockholdingsofFilipinosare lessthan60%. 43

Theassertionofpetitionersthat"doubt"onlyexistswhenthestockholdingsarelessthan60%failstoconvince

thisCourt.DOJOpinionNo.20,whichpetitionersquotedintheirpetition,onlymadeanexampleofaninstance

where"doubt"astotheownershipofthecorporationexists.Itwouldbeludicroustolimittheapplicationofthe

saidwordonlytotheinstanceswherethestockholdingsofnon­Filipinostockholdersaremorethan40%ofthe

totalstockholdingsinacorporation.Thecorporationsinterestedincircumventingourlawswouldclearlystriveto

have"60%FilipinoOwnership"atfacevalue.Itwouldbesenselessfortheseapplyingcorporationstostatein

theirrespectivearticlesofincorporationthattheyhavelessthan60%Filipinostockholderssincetheapplications

willbedeniedinstantly.Thus,variouscorporateschemesandlayeringsareutilizedtocircumventtheapplication

oftheConstitution.

Obviously,theinstantcasepresentsasituationwhichexhibitsaschemeemployedbystockholderstocircumvent

thelaw,creatingacloudofdoubtintheCourt’smind.Todetermine,therefore,theactualparticipation,director

2/9/2017

G.R.No.195580

indirect,ofMBMI,thegrandfatherrulemustbeused.

McArthurMining,Inc.

Toestablishtheactualownership,interestorparticipationofMBMIineachofpetitioners’corporatestructure,they

havetobe"grandfathered."

Aspreviouslydiscussed,McArthuracquireditsMPSAapplicationfromMMC,whichacquireditsapplicationfrom

SMMI.McArthurhasacapitalstockoftenmillionpesos(PhP10,000,000)dividedinto10,000commonsharesat

onethousandpesos(PhP1,000)pershare,subscribedtobythefollowing: 44

Name

Nationality Numberof Shares

Amount

AmountPaid

Subscribed

MadridejosMining

Filipino

5,997

PhP

PhP825,000.00

Corporation

5,997,000.00

MBMIResources,

Canadian

3,998

PhP3,998,000.0 PhP1,878,174.60

Inc.

LauroL.Salazar

Filipino

1

PhP1,000.00

PhP1,000.00

FernandoB.

Filipino

1

PhP1,000.00

PhP1,000.00

Esguerra

ManuelA.Agcaoili

Filipino

1

PhP1,000.00

PhP1,000.00

MichaelT.Mason

American

1

PhP1,000.00

PhP1,000.00

KennethCawkell

Canadian

1

PhP1,000.00

PhP1,000.00

 

Total

10,000

PhP

PhP2,708,174.60

 

10,000,000.00

(emphasissupplied)

Interestingly, looking at the corporate structure of MMC, we take note that it has a similar structure and compositionasMcArthur.Infact,itwouldseemthatMBMIisalsoamajorinvestorand"controls" 45 MBMIand also, similar nominal shareholders were present, i.e. Fernando B. Esguerra (Esguerra), Lauro L. Salazar (Salazar),MichaelT.Mason(Mason)andKennethCawkell(Cawkell):

MadridejosMiningCorporation

Name

Nationality

Numberof

Amount

AmountPaid

 

Shares

Subscribed

OlympicMines

Filipino

6,663

PhP6,663,000.00

PhP0

&

Development

Corp.

MBMI

Canadian

3,331

PhP3,331,000.00

PhP2,803,900.00

Resources,

Inc.

AmantiLimson

Filipino

1

PhP1,000.00

PhP1,000.00

FernandoB.

Filipino

1

PhP1,000.00

PhP1,000.00

Esguerra

LauroSalazar

Filipino

1

PhP1,000.00

PhP1,000.00

EmmanuelG.

Filipino

1

PhP1,000.00

PhP1,000.00

Hernando

MichaelT.

American

1

PhP1,000.00

PhP1,000.00

Mason

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G.R.No.195580

Kenneth

Canadian

1

PhP1,000.00

PhP1,000.00

Cawkell

 

Total

10,000

PhP

PhP2,809,900.00

 

10,000,000.00

 

(emphasissupplied)

Noticeably, Olympic Mines &Development Corporation (Olympic) did not pay any amount with respect to the number of shares they subscribed to in the corporation, which is quite absurd since Olympic is the major stockholder in MMC. MBMI’s 2006 Annual Report sheds light on why Olympic failed to pay any amount with respecttothenumberofsharesitsubscribedto.ItstatesthatOlympicenteredintojointventureagreementswith

severalPhilippinecompanies,whereinitholdsdirectlyandindirectlya60%effectiveequityinterestintheOlympic

Properties. 46 QuotingthesaidAnnualreport:

OnSeptember9,2004,theCompanyandOlympicMines&DevelopmentCorporation("Olympic")enteredintoa

seriesofagreementsincludingaPropertyPurchaseandDevelopmentAgreement(theTransactionDocuments) withrespecttothreenickellateritepropertiesinPalawan,Philippines(the"OlympicProperties").TheTransaction DocumentseffectivelyestablishajointventurebetweentheCompanyandOlympicforpurposesofdevelopingthe

OlympicProperties.TheCompanyholdsdirectlyandindirectlyaninitial60%interestinthejointventure.Under

certain circumstances and upon achieving certain milestones, the Company may earn up to a 100%interest, subjecttoa2.5%netrevenueroyalty. 47 (emphasissupplied)

Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered," company layering was utilized by MBMI to gain controlover McArthur. It is apparent that MBMI has more than 60%or more equity interestinMcArthur,makingthelatteraforeigncorporation.

TesoroMiningandDevelopment,Inc.

Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten million pesos (PhP

10,000,000)dividedintotenthousand(10,000)commonsharesatPhP1,000pershare,asdemonstratedbelow:

Name

Nationality Numberof

Amount

AmountPaid

 

Shares

Subscribed

SaraMarie

Filipino

5,997

PhP

PhP825,000.00

 

5,997,000.00

Mining,Inc.

MBMI

Canadian

3,998

PhP

PhP1,878,174.60

 

3,998,000.00

Resources,Inc.

LauroL.Salazar

Filipino

1

PhP1,000.00

PhP1,000.00

FernandoB.

Filipino

1

PhP1,000.00

PhP1,000.00

Esguerra

ManuelA.

Filipino

1

PhP1,000.00

PhP1,000.00

Agcaoili

MichaelT.Mason

American

1

PhP1,000.00

PhP1,000.00

KennethCawkell

Canadian

1

PhP1,000.00

PhP1,000.00

 

Total

10,000

PhP

PhP2,708,174.60

10,000,000.00

(emphasis

supplied)

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G.R.No.195580

Exceptforthename"SaraMarieMining,Inc.,"thetableaboveshowsexactlythesamefiguresasthecorporate structure of petitioner McArthur, down to the last centavo. All the other shareholders are the same: MBMI, Salazar,Esguerra,Agcaoili,MasonandCawkell.Thefiguresunder"Nationality,""NumberofShares,""Amount Subscribed,"and"AmountPaid"areexactlythesame.Delvingdeeper,wescrutinizeSMMI’scorporatestructure:

SaraMarieMining,Inc.

Name

Nationality Numberof

Amount

AmountPaid

 

Shares

Subscribed

OlympicMines&

Filipino

6,663

PhP

PhP0

6,663,000.00

Development

Corp.

MBMIResources,

Canadian

3,331

PhP

PhP2,794,000.00

 

3,331,000.00

Inc.

AmantiLimson

Filipino

1

PhP1,000.00

PhP1,000.00

FernandoB.

Filipino

1

PhP1,000.00

PhP1,000.00

Esguerra

LauroSalazar

Filipino

1

PhP1,000.00

PhP1,000.00

EmmanuelG.

Filipino

1

PhP1,000.00

PhP1,000.00

Hernando

MichaelT.Mason

American

1

PhP1,000.00

PhP1,000.00

KennethCawkell

Canadian

1

PhP1,000.00

PhP1,000.00

 

Total

10,000

PhP

PhP2,809,900.00

10,000,000.00

(emphasis

supplied)

AftersubsequentlystudyingSMMI’scorporatestructure,itisnotfarfetchedforustospottheglaringsimilarity betweenSMMIandMMC’scorporatestructure.Again,thepresenceofidenticalstockholders,namely:Olympic, MBMI, Amanti Limson (Limson), Esguerra, Salazar, Hernando, Mason and Cawkell. The figures under the headings "Nationality," "Number of Shares," "Amount Subscribed," and "Amount Paid" are exactly the same exceptfor the amountpaid byMBMIwhich nowreflectsthe amountoftwo million seven hundred ninetyfour thousand pesos (PhP2,794,000). Oddly, the totalvalue of the amount paid is two million eight hundred nine

thousandninehundredpesos(PhP2,809,900).

Accordingly,after"grandfathering"petitionerTesoroandfactoringinOlympic’sparticipationinSMMI’scorporate

structure,itisclearthatMBMIisincontrolofTesoroandowns60%ormoreequityinterestinTesoro.Thismakes

petitionerTesoroanon­Filipinocorporationand,thus,disqualifiesittoparticipateintheexploitation,utilization

anddevelopmentofournaturalresources.

NarraNickelMiningandDevelopmentCorporation

Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDC’s MPSA application, whosecorporatestructure’sarrangementissimilartothatofthefirsttwopetitionersdiscussed.Thecapitalstock

ofNarraistenmillionpesos(PhP10,000,000),whichisdividedintotenthousandcommonshares(10,000)at

onethousandpesos(PhP1,000)pershare,shownasfollows:

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Name

Nationality

Numberof

Amount

AmountPaid

Shares

Subscribed

PatriciaLouise

Filipino

5,997

PhP

PhP1,677,000.00

5,997,000.00

Mining&

Development

Corp.

MBMI

Canadian

3,998

PhP

PhP1,116,000.00

 

3,996,000.00

Resources,Inc.

HiginioC.

Filipino

1

PhP1,000.00

PhP1,000.00

Mendoza,Jr.

HenryE.

Filipino

1

PhP1,000.00

PhP1,000.00

Fernandez

ManuelA.

Filipino

1

PhP1,000.00

PhP1,000.00

Agcaoili

Ma.ElenaA.

Filipino

1

PhP1,000.00

PhP1,000.00

Bocalan

BayaniH.Agabin

Filipino

1

PhP1,000.00

PhP1,000.00

RobertL.

American

1

PhP1,000.00

PhP1,000.00

McCurdy

KennethCawkell

Canadian

1

PhP1,000.00

PhP1,000.00

 

Total

10,000

PhP

PhP2,800,000.00

10,000,000.00

(emphasis

supplied)

Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and Esguerra, is present in this corporatestructure.

PatriciaLouiseMining&DevelopmentCorporation

Usingthegrandfathermethod,wefurtherlookandexaminePLMDC’scorporatestructure:

Name

Nationality Number ofShares

Amount

Amount

Subscribed

Paid

PalawanAlphaSouthResources

Filipino

6,596

PhP

PhP0

DevelopmentCorporation

6,596,000.00

MBMIResources,

Canadian

3,396

PhP

PhP

 

3,396,000.00 2,796,000.00

Inc.

HiginioC.Mendoza,Jr.

Filipino

1

PhP1,000.00

PhP

 

1,000.00

FernandoB.Esguerra

Filipino

1

PhP1,000.00

PhP

 

1,000.00

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G.R.No.195580

HenryE.Fernandez

Filipino

1

PhP1,000.00

PhP

1,000.00

LauroL.Salazar

Filipino

1

PhP1,000.00

PhP

 

1,000.00

ManuelA.Agcaoili

Filipino

1

PhP1,000.00

PhP

 

1,000.00

BayaniH.Agabin

Filipino

1

PhP1,000.00

PhP

 

1,000.00

MichaelT.Mason

American

1

PhP1,000.00

PhP

 

1,000.00

KennethCawkell

Canadian

1

PhP1,000.00

PhP

 

1,000.00

 

Total

10,000

PhP

PhP

10,000,000.00

2,708,174.60

(emphasis

supplied)

Yetagain,theusualplayersinpetitioners’corporatestructuresarepresent.Similarly,theamountofmoneypaid by the 2nd tier majority stock holder, in this case, Palawan Alpha South Resources and Development Corp. (PASRDC),iszero.

StudyingMBMI’sSummaryofSignificantAccountingPoliciesdatedOctober31,2005explainsthereasonbehind

theintricatecorporatelayeringthatMBMIimmerseditselfin:

JOINT VENTURESTheCompany’sownershipinterestsinvariousminingventuresengagedintheacquisition, explorationanddevelopmentofmineralpropertiesinthePhilippinesisdescribedasfollows:

(a)OlympicGroup

ThePhilippinecompaniesholdingtheOlympicProperty,andtheownershipandintereststherein,areasfollows:

Olympic­Philippines(the"OlympicGroup")

SaraMarieMiningPropertiesLtd.("SaraMarie")33.3%

TesoroMining&Development,Inc.(Tesoro)60.0%

PursuanttotheOlympicjointventureagreementtheCompanyholdsdirectlyandindirectlyaneffectiveequity

interestintheOlympicPropertyof60.0%.Pursuanttoashareholders’agreement,theCompanyexercisesjoint

controloverthecompaniesintheOlympicGroup.

(b)AlphaGroup

ThePhilippinecompaniesholdingtheAlphaProperty,andtheownershipintereststherein,areasfollows:

Alpha­Philippines(the"AlphaGroup")

PatriciaLouiseMiningDevelopmentInc.("Patricia")34.0%

NarraNickelMining&DevelopmentCorporation(Narra)60.4%

UnderajointventureagreementtheCompanyholdsdirectlyandindirectlyaneffectiveequityinterestintheAlpha Property of 60.4%. Pursuant to a shareholders’ agreement, the Company exercises joint control over the companiesintheAlphaGroup. 48 (emphasissupplied)

Concludingfromtheabove­statedfacts,itisquitesafetosaythatpetitionersMcArthur,TesoroandNarraarenot

FilipinosinceMBMI,a100%Canadiancorporation,owns60%ormoreoftheirequityinterests.Suchconclusionis

derivedfromgrandfatheringpetitioners’corporateowners,namely:MMI,SMMIandPLMDC.Goingfurtherand adding to the picture, MBMI’s Summary of Significant Accounting Policies statement– –regarding the "joint venture"agreementsthatitenteredintowiththe"Olympic"and"Alpha"groups––involvesSMMI,Tesoro,PLMDC andNarra.Noticeably,theownershipofthe"layered"corporationsboilsdowntoMBMI,Olympicorcorporations underthe"Alpha"groupwhereinMBMIhasjointventureagreementswith,practicallyexercisingmajoritycontrol overthecorporationsmentioned.Ineffect,whetherlookingatthecapitalstructureortheunderlyingrelationships

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G.R.No.195580

between and among the corporations, petitioners are NOT Filipino nationals and must be considered foreign

since60%ormoreoftheircapitalstocksorequityinterestsareownedbyMBMI.

Applicationoftheresinteraliosactarule

PetitionersquestiontheCA’suseoftheexceptionoftheresinteraliosactaorthe"admissionbyco­partneror agent" rule and "admission by privies" under the Rules of Court in the instant case, by pointing out that statementsmadebyMBMIshouldnotbeadmittedinthiscasesinceitisnotapartytothecaseandthatitisnota "partner"ofpetitioners.

Secs.29and31,Rule130oftheRevisedRulesofCourtprovide:

Sec.29.Admissionbyco­partneroragent.­Theactordeclarationofapartneroragentofthepartywithinthe

scopeofhisauthorityandduringtheexistenceofthepartnershiporagency,maybegiveninevidenceagainst

suchpartyafterthepartnershiporagencyisshownbyevidenceotherthansuchactordeclarationitself.The

sameruleappliestotheactordeclarationofajointowner,jointdebtor,orotherpersonjointlyinterestedwiththe

party.

Sec.31.Admissionbyprivies.­Whereonederivestitletopropertyfromanother,theact,declaration,oromission

ofthelatter,whileholdingthetitle,inrelationtotheproperty,isevidenceagainsttheformer.

Petitionersclaimthatbeforetheabove­mentionedRulecanbeappliedtoacase,"thepartnershiprelationmust be shown, and that proof of the fact must be made by evidence other than the admission itself." 49 Thus, petitioners assert that the CAerred in finding that a partnership relationship exists between them and MBMI because,infact,nosuchpartnershipexists.

Partnershipsvs.jointventureagreements

PetitionersclaimthattheCAerredinapplyingSec.29,Rule130oftheRulesbystatingthat"byenteringintoa

jointventure,MBMIhaveajointinterest"withNarra,TesoroandMcArthur.Theychallengedtheconclusionofthe

CAwhichpertainstotheclosecharacteristicsof

"partnerships"and"jointventureagreements."Further,theyassertedthatbeforethisparticularpartnershipcan be formed, it should have been formally reduced into writing since the capital involved is more than three

thousandpesos(PhP3,000).Beingthatthereisnoevidenceofwrittenagreementtoformapartnershipbetween

petitionersandMBMI,nopartnershipwascreated.

Wedisagree.

Apartnershipisdefinedastwoormorepersonswhobindthemselvestocontributemoney,property,orindustry toacommonfundwiththeintentionofdividingtheprofitsamongthemselves. 50 Ontheotherhand,jointventures have been deemed to be "akin" to partnerships since it is difficult to distinguish between joint ventures and partnerships.Thus:

[T]herelationsofthepartiestoajointventureandthenatureoftheirassociationaresosimilarandcloselyakinto apartnershipthatitisordinarilyheldthattheirrights,duties,andliabilitiesaretobetestedbyruleswhichare closelyanalogoustoandsubstantiallythesame,ifnotexactlythesame,asthosewhichgovernpartnership.In fact,ithasbeensaidthatthetrendinthelawhasbeentoblurthedistinctionsbetweenapartnershipandajoint venture,verylittlelawbeingfoundapplicabletoonethatdoesnotapplytotheother. 51

Thoughsomeclaimthatpartnershipsandjointventuresaretotallydifferentanimals,thereareveryfewrulesthat differentiateonefromtheother;thus,jointventuresaredeemed"akin"orsimilartoapartnership.Infact,injoint ventureagreements,rulesandlegalincidentsgoverningpartnershipsareapplied. 52

Accordingly,culledfromtheincidentsandrecordsofthiscase,itcanbeassumedthattherelationshipsentered betweenandamongpetitionersandMBMIarenosimple"jointventureagreements."Asarule,corporationsare prohibited from entering into partnership agreements; consequently, corporations enter into joint venture agreements with other corporations or partnerships for certain transactions in order to form "pseudo partnerships."

Obviously,astheintricatewebof"ventures"enteredintobyandamongpetitionersandMBMIwasexecutedto circumvent the legal prohibition against corporations entering into partnerships, then the relationship created should be deemed as "partnerships," and the laws on partnership should be applied. Thus, a joint venture agreement between and among corporations may be seen as similar to partnerships since the elements of partnershiparepresent.

ConsideringthattherelationshipsfoundbetweenpetitionersandMBMIareconsideredtobepartnerships,then

theCAisjustifiedinapplyingSec.29,Rule130oftheRulesbystatingthat"byenteringintoajointventure,MBMI

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haveajointinterest"withNarra,TesoroandMcArthur.

PanelofArbitrators’jurisdiction

We affirm the ruling of the CAin declaring that the POAhasjurisdiction over the instant case. The POAhas jurisdictiontosettledisputesoverrightstominingareaswhichdefinitelyinvolvethepetitionsfiledbyRedmont againstpetitionersNarra,McArthurandTesoro.Redmont,byfilingitspetitionagainstpetitioners,isassertingthe rightofFilipinosoverminingareasinthePhilippinesagainstallegedforeign­ownedminingcorporations.Such

claimconstitutesa"dispute"foundinSec.77ofRA7942:

Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have exclusiveandoriginaljurisdictiontohearanddecidethefollowing:

(a)Disputesinvolvingrightstominingareas

(b)Disputesinvolvingmineralagreementsorpermits

WeheldinCelestialNickelMiningExplorationCorporationv.MacroasiaCorp.: 53

Thephrase"disputesinvolvingrightstominingareas"referstoanyadverseclaim,protest,oroppositiontoan applicationformineralagreement.ThePOAthereforehasthejurisdictiontoresolveanyadverseclaim,protest, oroppositiontoapendingapplicationforamineralagreementfiledwiththeconcernedRegionalOfficeofthe

MGB.ThisisclearfromSecs.38and41oftheDENRAO96­40,whichprovide:

Sec.38.

xxxx

Within thirty(30) calendar daysfrom the last date of publication/posting/radio announcements, the authorized officer(s)oftheconcernedoffice(s)shallissueacertification(s)thatthepublication/posting/radioannouncement

havebeencompliedwith.Anyadverseclaim,protest,oppositionshallbefileddirectly,withinthirty(30)calendar

daysfromthelastdateofpublication/posting/radioannouncement,withtheconcernedRegionalOfficeorthrough anyconcernedPENROorCENROforfilingintheconcernedRegionalOfficeforpurposesofitsresolutionbythe PanelofArbitratorspursuanttotheprovisionsofthisActandtheseimplementingrulesandregulations.Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a

certificationtothateffectwithinfive(5)workingdaysfromthedateoffinalityofresolutionthereof.Wherethereis

noadverseclaim,protestoropposition,thePanelofArbitratorsshalllikewiseissueaCertificationtothateffect

withinfiveworkingdaystherefrom.

xxxx

NoMineralAgreementshallbeapprovedunlesstherequirementsunderthisSectionarefullycompliedwithand

anyadverseclaim/protest/oppositionisfinallyresolvedbythePanelofArbitrators.

Sec.41.

xxxx

Withinfifteen(15)workingdaysformthereceiptoftheCertificationissuedbythePanelofArbitratorsasprovided

inSection38hereof,theconcernedRegionalDirectorshallinitiallyevaluatetheMineralAgreementapplicationsin

areas outside Mineral reservations. He/She shall thereafter endorse his/her findings to the Bureau for further

evaluationbytheDirectorwithinfifteen(15)workingdaysfromreceiptofforwardeddocuments.Thereafter,the

Director shall endorse the same to the secretary for consideration/approval within fifteen working days from receiptofsuchendorsement.

IncaseofMineralAgreementapplicationsinareaswithMineralReservations,withinfifteen(15)workingdays

fromreceiptoftheCertificationissuedbythePanelofArbitratorsasprovidedforinSection38hereof,thesame

shallbeevaluatedandendorsedbytheDirectortotheSecretaryforconsideration/approvalwithinfifteendays

fromreceiptofsuchendorsement.(emphasissupplied)

Ithasbeenmadeclearfromtheaforecitedprovisionsthatthe"disputesinvolvingrightstominingareas"under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or confermentofminingrights.

ThejurisdictionofthePOAoveradverseclaims,protest,oroppositionstoaminingrightapplicationisfurther

elucidatedbySecs.219and43ofDENRAO95­936,whichread:

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Sec.219.FilingofAdverseClaims/Conflicts/Oppositions.­NotwithstandingtheprovisionsofSections28,43and

57above,anyadverseclaim,protestoroppositionspecifiedinsaidsectionsmayalsobefileddirectlywiththe

PanelofArbitratorswithintheconcernedperiodsforfilingsuchclaim,protestoroppositionasspecifiedinsaid

Sections.

Sec.43.Publication/PostingofMineralAgreement.­

xxxx

The Regional Director or concerned Regional Director shall also cause the posting of the application on the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and municipality(ies),copyfurnishedthebarangayswheretheproposedcontractareaislocatedonceaweekfortwo

(2)consecutiveweeksinalanguagegenerallyunderstoodinthelocality.Afterforty­five(45)daysfromthelast

dateofpublication/postinghasbeenmadeandnoadverseclaim,protestoroppositionwasfiledwithinthesaid

forty­five(45)days,theconcernedofficesshallissueacertificationthatpublication/postinghasbeenmadeand

thatnoadverseclaim,protestoroppositionofwhatevernaturehasbeenfiled.Ontheotherhand,iftherebeany adverse claim, protest or opposition, the same shall be filed within forty­five (45) days from the last date of publication/posting,withtheRegionalOfficesconcerned,orthroughtheDepartment’sCommunityEnvironment andNaturalResourcesOfficers(CENRO)orProvincialEnvironmentandNaturalResourcesOfficers(PENRO),to befiledattheRegionalOfficeforresolutionofthePanelofArbitrators.Howeverpreviouslypublishedvalidand subsistingminingclaimsareexemptedfromposted/postingrequiredunderthisSection.

Nomineralagreementshallbeapprovedunlesstherequirementsunderthissectionarefullycompliedwithand any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators. (Emphasissupplied.)

Ithasbeenmadeclearfromtheaforecitedprovisionsthatthe"disputesinvolvingrightstominingareas"under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or confermentofminingrights.

ThejurisdictionofthePOAoveradverseclaims,protest,oroppositionstoaminingrightapplicationisfurther

elucidatedbySecs.219and43ofDENROAO95­936,whichreads:

Sec.219.FilingofAdverseClaims/Conflicts/Oppositions.­NotwithstandingtheprovisionsofSections28,43and

57above,anyadverseclaim,protestoroppositionspecifiedinsaidsectionsmayalsobefileddirectlywiththe

PanelofArbitratorswithintheconcernedperiodsforfilingsuchclaim,protestoroppositionasspecifiedinsaid

Sections.

Sec.43.Publication/PostingofMineralAgreementApplication.­

xxxx

The Regional Director or concerned Regional Director shall also cause the posting of the application on the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and municipality(ies),copyfurnishedthebarangayswheretheproposedcontractareaislocatedonceaweekfortwo

(2)consecutiveweeksinalanguagegenerallyunderstoodinthelocality.Afterforty­five(45)daysfromthelast

dateofpublication/postinghasbeenmadeandnoadverseclaim,protestoroppositionwasfiledwithinthesaid

forty­five(45)days,theconcernedofficesshallissueacertificationthatpublication/postinghasbeenmadeand

thatnoadverseclaim,protestoroppositionofwhatevernaturehasbeenfiled.Ontheotherhand,iftherebeany adverse claim, protest or opposition, the same shall be filed within forty­five (45) days from the last date of publication/posting,withtheRegionalofficesconcerned,or throughtheDepartment’sCommunityEnvironment andNaturalResourcesOfficers(CENRO)orProvincialEnvironmentandNaturalResourcesOfficers(PENRO),to befiledattheRegionalOfficeforresolutionofthePanelofArbitrators.However,previouslypublishedvalidand subsistingminingclaimsareexemptedfromposted/postingrequiredunderthisSection.

Nomineralagreementshallbeapprovedunlesstherequirementsunderthissectionarefullycompliedwithand any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators. (Emphasissupplied.)

These provisionslead usto conclude thatthe power ofthe POAto resolve anyadverse claim,opposition,or

protestrelativetominingrightsunderSec.77(a)ofRA7942isconfinedonlytoadverseclaims,conflictsand

oppositionsrelatingtoapplicationsforthegrantofmineralrights.

POA’sjurisdictionisconfinedonlytoresolutionsofsuchadverseclaims,conflictsandoppositionsandithasno authority to approve or reject said applications. Such power is vested in the DENR Secretary upon recommendationoftheMGBDirector.Clearly,POA’sjurisdictionover"disputesinvolvingrightstominingareas" hasnothingtodowiththecancellationofexistingmineralagreements.(emphasisours)

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Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes over MPSAapplicationssubjectofRedmont’spetitions.However,saidjurisdictiondoesnotincludeeithertheapproval orrejectionoftheMPSAapplications,whichisvestedonlyupontheSecretaryoftheDENR.Thus,thefindingof thePOA,withrespecttotherejectionofpetitioners’MPSAapplicationsbeingthattheyareforeigncorporation,is valid.

JusticeMarvicMarioVictorF.Leonen,inhisDissent,assertsthatitistheregularcourts,notthePOA,thathas

jurisdictionovertheMPSAapplicationsofpetitioners.

Thispostulationisincorrect.

Itisbasicthatthejurisdictionofthecourtisdeterminedbythestatuteinforceatthetimeofthecommencement oftheaction. 54

Sec.19,BatasPambansaBlg.129or"TheJudiciaryReorganization

Actof1980"reads:

Sec.19.JurisdictioninCivilCases.—RegionalTrialCourtsshallexerciseexclusiveoriginaljurisdiction:

1.Inallcivilactionsinwhichthesubjectofthelitigationisincapableofpecuniaryestimation.

Ontheotherhand,thejurisdictionofPOAisunequivocalfromSec.77ofRA7942:

Section77.PanelofArbitrators.—

xxxWithinthirty(30)days,afterthesubmissionofthecasebythepartiesforthedecision,thepanelshall

haveexclusiveandoriginaljurisdictiontohearanddecidethefollowing:

(c)Disputesinvolvingrightstominingareas

(d)Disputesinvolvingmineralagreementsorpermits

It is clear that POAhas exclusive and originaljurisdiction over any and alldisputes involving rights to mining areas. One such dispute is an MPSAapplication to which an adverse claim, protest or opposition is filed by anotherinterestedapplicant.1âwphi1 Inthecaseatbar,thedisputearoseororiginatedfromMPSAapplicationswhere petitioners are asserting their rights to mining areas subject of their respective MPSA applications. Since respondent filed 3 separate petitions for the denial of said applications, then a controversy has developed betweenthepartiesanditisPOA’sjurisdictiontoresolvesaiddisputes.

Moreover,thejurisdictionoftheRTCinvolvescivilactionswhilewhatpetitionersfiledwiththeDENRRegional

OfficeoranyconcernedDENREorCENROareMPSAapplications.ThusPOAhasjurisdiction.

Furthermore,thePOAhasjurisdictionovertheMPSAapplicationsunderthedoctrineofprimaryjurisdiction.Euro­ medLaboratoriesv.ProvinceofBatangas 55 elucidates:

The doctrine of primary jurisdiction holds that if a case is such that its determination requires the expertise, specializedtrainingandknowledgeofanadministrativebody,reliefmustfirstbeobtainedinanadministrative proceedingbeforeresorttothecourtsishadevenifthemattermaywellbewithintheirproperjurisdiction.

WhatevermaybethedecisionofthePOAwilleventuallyreachthecourtsystemviaaresorttotheCAandtothis

Courtasalastrecourse.

SellingofMBMI’ssharestoDMCI

Asstatedbefore,petitioners’ManifestationandSubmissiondatedOctober19,2012wouldwantustodeclarethe

instantpetitionmootandacademicduetothetransferandconveyanceofalltheshareholdingsandinterestsof

MBMItoDMCI,acorporationdulyorganizedandexistingunderPhilippinelawsandisatleast60%Philippine­

owned. 56 Petitionersreasonedthattheynowcannotbeconsideredasforeign­owned;thetransferoftheirshares supposedlycuredthe"defect"oftheirpreviousnationality.TheyclaimedthattheircurrentFTAAcontractwiththe State should stand since "even wholly­owned foreign corporations can enter into an FTAA with the State." 57 PetitionersstressthatthereshouldnolongerbeanyissueleftasregardstheirqualificationtoenterintoFTAA contractssincetheyarequalifiedtoengageinminingactivitiesinthePhilippines.Thus,whetherthe"grandfather rule"orthe"controltest"isused,thenationalitiesofpetitionerscannotbedoubtedsinceitwouldpassbothtests.

ThesaleoftheMBMIshareholdingstoDMCIdoesnothaveanybearingintheinstantcaseandsaidfactshould

bedisregarded.ThemanifestationcannolongerbeconsideredbyussinceitisbeingtackledinG.R.No.202877

pendingbeforethisCourt.1âwphi1 Thus,thequestionofwhetherpetitioners,allegedlyaPhilippine­ownedcorporation

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duetothesaleofMBMI'sshareholdingstoDMCI,areallowedtoenterintoFTAAswiththeStateisanon­issuein

thiscase.

Inending,the"controltest"isstilltheprevailingmodeofdeterminingwhetherornotacorporationisaFilipino corporation, within the ambit of Sec. 2, Art. II of the 1987 Constitution, entitled to undertake the exploration, developmentandutilizationofthenaturalresourcesofthePhilippines.WheninthemindoftheCourtthereis

doubt,basedontheattendantfactsandcircumstancesofthecase,inthe60­40Filipino­equityownershipinthe

corporation,thenitmayapplythe"grandfatherrule."

WHEREFORE, premises considered, the instant petition is DENIED. The assailed Court of Appeals Decision

datedOctober1,2010andResolutiondatedFebruary15,2011areherebyAFFIRMED.

SOORDERED.

PRESBITEROJ.VELASCO,JR.

AssociateJustice

WECONCUR:

ROBERTOA.ABAD

AssociateJustice

DIOSDADOM.PERALTA

AssociateJustice

JOSECATRALMENDOZA

AssociateJustice

Idissent.SeeSeparateOpinion

MARVICMARIOVICTORF.LEONEN

AssociateJustice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assignedtothewriteroftheopinionoftheCourt'sDivision.

PRESBITEROJ.VELASCO,JR.

AssociateJustice

Chairperson

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairperson'sAttestation,Icertifythatthe

conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof

theopinionoftheCourt'sDivision.

MARIALOURDESP.A.SERENO

ChiefJustice

Footnotes

1 PennedbyAssociateJusticeRubenC.AysonandconcurredinbyAssociateJusticesAmelitaG.Tolentino

andNorrnandieB.Pizzaro.

2 Rollo,p.573.

3 Id.at86.

4 Id.at82.

5 Id.at84.

6 Id.at139­140.

7 Id.at379.

8 Id.at378.

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9 Id.at390.

10 Id.at411.

11 Id.at414.

12 Id.at353.

13 Id.at367,seeapplicationonp.368.

14 Id.at334­337.

15 Id.at438.

16 Id.at460.

17 Id.at202.

18 Id.at473.

19 Id.at486.

20 Id.at522.

21 Id.at623.

22 Id.at629.

23 Id.at95­96.

24 DepartmentofJusticeOpinionNo.020,Seriesof2005,adoptingthe1967SECRules.

25 Rollo,p.89.

26 Id.at573­590,O.P.CaseNo.10­E­229,pennedbyExecutiveSecretaryPaquitoN.Ochoa,Jr.

27 Id.at587.

28 Id.

29 Id.at588.

30 Id.at591­594.

31 Id.at20­21.

32 Davidv.Macapagal­Arroyo,G.R.No.171396,etc.,May3,2006,489SCRA160.

33 Id.

34 Id.

35 Id.

36 Rollo,pp.138­139.

37 Id.at95­96.

38 Id.at101.

39 Id.at587.

40 Id.at679­689.

41 Id.at33.

42 "Proposed Resolution No. 533­ Resolution to Incorporate in the Article on National Economy and

PatrimonyaProvisiononAncestralLands,"IIIRecord,CONSTITUTIONALCOMMISSION,R.C.C.No.55

(August13,1986).

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43 Rollo,p.44,quotingDOJOpinionNo.20.

44 Id.at82.

45 Id.

46 Id.at83.

47 Id.

48 Id.at87­88.

49 Id.at48.

50 CIVILCODE,Art.1767.

51 §4,46AmJur2d,pp.24­25.

52 §30,46 Am Jur 2d – "lawrelating to dissolution and termination ofpartnershipsisapplicable to joint ventures"; §17, 46 Am Jur 2d – "In other words, an agreement to combine money, effort, skill, and knowledge,andtopurchaselandforthepurposeofresellingordealingwithitataprofit,isapartnership

agreement,orajointventurehavingingeneralthelegalincidentsofapartnership";§50,46AmJur2d–

"Therelationshipbetweenjointventurers,likethatexistingbetweenpartners,isfiduciaryincharacterand imposesuponalltheparticipantstheobligationofloyaltytothejointconcernandoftheutmostgoodfaith, fairness,andhonestyintheirdealingswitheachotherwithrespecttomatterspertainingtotheenterprise";

§57–"Ithasalreadybeenpointedoutthattherights,duties,andliabilitiesofjointventurersaregoverned,

ingeneral,byruleswhicharesimilaroranalogoustothosewhichgovernthecorrespondingrights,duties, andliabilitiesofpartners,exceptastheyarelimitedbythefactthatthescopeofajointventureisnarrower thanthatoftheordinarypartnership.Asinthecaseofpartners,jointventurersmaybejointlyandseverally

liabletothirdpartiesforthedebtsoftheventure";§58,46AmJur2d–"Ithasalsobeenheldthatthe

liabilityfortortsofpartiestoajointventureagreementisgovernedbythelawapplicabletopartnerships."

53 G.R.Nos.169080,172936,176226&176319,December19,2007,541SCRA166.

54 Lee,etal.v.PresidingJusge,etal.,G.R.No.68789,November10,1986;Peoplev.Paderna,No.L­

28518,January29,1968.

55 G.R.No.148106,July17,2006.

56 Rollo,p.684.

57 Id.at687.

TheLawphilProject­ArellanoLawFoundation

5 7 Id.at687. TheLawphilProject­ArellanoLawFoundation