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VOL. 18, DECEMBER 17, 1966


925
SUPREME COURT REPORTS ANNOTATED
Palting vs. San Jose Petroleum, Inc.
No. L-14441. December 17, 1966.
PEDRO R. PALTING, petitioner, vs. SAN JOSE PETROLEUM INCORPORATED,
respondent.

NATURE: PETITION for review by certiorari of certain orders. of the Securities and
Exchange Commission.
FACTS: In 1956, San Jose Petroleum, Inc. (SJP), a mining corporation organized under
the laws of Panama, was allowed by the Securities and Exchange Commission (SEC) to
sell its shares of stocks in the Philippines. Apparently, the proceeds of such sale shall be
invested in San Jose Oil Company, Inc. (SJO), a domestic mining corporation. Pedro
Palting opposed the authorization granted to SJP because said tie up between SJP and
SJO is violative of the constitution; that SJO is 90% owned by SJP; that the other 10% is
owned by another foreign corporation; that a mining corporation cannot be interested in
another mining corporation. SJP on the other hand invoked that under the parity rights
agreement (Laurel-Langley Agreement), SJP, a foreign corporation, is allowed to invest
in a domestic corporation.
ISSUE: Whether or not SJP is correct.
HELD: No. The parity rights agreement is not applicable to SJP. The parity rights are
only granted to American business enterprises or enterprises directly or indirectly
controlled by US citizens. SJP is a Panamanian corporate citizen. The other owners of SJO
are Venezuelan corporations, not Americans. SJP was not able to show contrary evidence.
Further, the Supreme Court emphasized that the stocks of these corporations are being
traded in stocks exchanges abroad which renders their foreign ownership subject to
change from time to time. This fact renders a practical impossibility to meet the
requirements under the parity rights. Hence, the tie up between SJP and SJO is illegal,
SJP not being a domestic corporation or an American business enterprise contemplated
under the Laurel-Langley Agreement.

FOR ALL THE FOREGOING CONSIDERATIONS, the motion of respondent to dismiss


this appeal, is, denied, and the orders of the Securities and Exchange Commissioner,
allowing the registration of Respondent's securities and licensing their sale in the
Philippines are hereby set aside. The case is remanded to the Securities and Exchange
Commission for appropriate action in consonance with this decision. With costs. Let a
copy of this decision be furnished the Solicitor General for whatever action he may deem
advisable to take in the premises. So ordered.