Atty: In order for a corporation to be considered as Philippine National under the Control Test , what is

the requirement.

Student: Majority of its shareholder should have a hold of shares with voting rights

Atty: What do you mean majority?

Student: In cases of like Nationalized Corporation there is a particular percentage as to the requirement
of the Filipino

Atty: Let us talk Philippine Nationals in particular, when can they be considered as a Philippine National
if you have a corporation who has a mixed of foreign and Filipino Stockholders?

Student: They are considered Philipine National , when the management and the control of business are
held majority of Filipino citizens

Atty: How do you insure that the managament and control of the business will be controlled by
Filipinos

Student: Majority of its BOD are also Filipino citizens.

Atty: What do you mean by majority?

Student: All of its BOD are Filipino citizens ,because through BOD it is the body in which a corporation
can act.

Atty: So you apply control test, control test basically means that in order to be considered as Philippine
National the corporation’s director must be Filipino citizens that’s what you read in the cases.

Student: As what I have read in the cases atty. basing it there in cases of like the natioanlized businesses
there was a requirement that 60 % of those holding shares with avoting rigts must be a Filipino citizens

Atty: And what do you call a corporation where 60% of its shares outstanding and entitled to vote are
held by Filipino citizens?
Going back to the question , how do you determine a Philippine National corporation using the Control
Test?
In determining the Philippine National using the control test there should be at least 60% of the voting
shares that are held and own by Filipino citizens. You have a coprporation which is organized in the
Philippines at least 60% of its capital stock outstanding and entitled to vote should be own by Filipino
Citizens in which case that corporation become a Filipino national , so that is control test if you have at
least 60% ,so that is the control tets but what happens when we have ( wala nipadayun si atty nilahus na
lng siya grandfather rule)

What about the grandfather rule ?

Student: It will apply supplementarily to the control test because it is the prevailing test by the use of the
grandfather rule you disect or try to trace the corporate structure or the equity structure in a particular
corporation so if ever there is one corpora tion which is to be created and there is a possible corporation
it is a it is requireed that you should be able to asess how many or the percentage the ownership of that
particular investing corporation is Filipino owned or foriegn owned to be able to determine the nationality
of the investee corporation

Atty: Give as an example of the application of the two tests

Student: In the case of Narra Nickel what happened here was Redmont filed an action before the in order
to cancell,or revokek the mineral production sharing agreement between 3 corporations

What is that document? mineral production sharing agreement?

There are like permits which allow a foerign corporation to exploit, extract mimerals or do mining in
certain portions
Adn conduct of mining activities is whatm type of activiiry?
A nationalized activity
And under our constitution it can only be done by corporations s which are owned at least 60% by
Filipino citizens so it is a nationalized activeity . Z

So what happened?

Redmont here try to apply for the same permit in certain parts in palaana butbit new thta these permits are
already distribute to the three corporations namely , Narra , McArthur and Tesoro. And after that he
claimed that these 3 corporastions are disqualified from having such mpsas because they are basically
foreigned owned thus contradicts the prohibitions provided for under the consitution particularly the
because it claims that these 3 corporations are controlled by a 100% Canadian Corporation namely
MBMI so in this regard those mpsa shoud be revoked or cancelled
so in this cassse the major issues was the determination really of the nationality of the three corporation
So let us take one corporation of those three, thr Mcarthur corporation
What is the structute of mc arthur mining copr
Wahtbwas thr corporat structure thst mac arthur had
Mc arthur has was bale to get its mpsas from its predecessor SMMI
CAPITAL STRUCTURE OF MMI