Corpo - Title Ii - Incorporation and Organization of Private Corporations

G.R. No.
195580 April 21, 2014
NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and
MCARTHUR MINING, INC., Petitioners,
vs.
REDMONT CONSOLIDATED MINES CORP., Respondent.
DECISION
VELASCO, JR., J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra Nickel and Mining
Development Corp. (Narra), Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining Inc.
(McArthur), which seeks to reverse the October 1, 2010 Decision1 and the February 15, 2011 Resolution of the
Court of Appeals (CA).
The Facts
Sometime in December 2006, respondent Redmont Consolidated Mines Corp. (Redmont), a domestic
corporation organized and existing under Philippine laws, took interest in mining and exploring certain areas of
the province of Palawan. After inquiring with the Department of Environment and Natural Resources (DENR), it
learned that the areas where it wanted to undertake exploration and mining activities where already covered by
Mineral Production Sharing Agreement (MPSA) applications of petitioners Narra, Tesoro and McArthur.
Petitioner McArthur, through its predecessor-in-interest Sara Marie Mining, Inc. (SMMI), filed an application for
an MPSA and Exploration Permit (EP) with the Mines and Geo-Sciences Bureau (MGB), Region IV-B, Office of
the Department of Environment and Natural Resources (DENR).
Subsequently, SMMI was issued MPSA-AMA-IVB-153 covering an area of over 1,782 hectares in Barangay
Sumbiling, Municipality of Bataraza, Province of Palawan and EPA-IVB-44 which includes an area of 3,720
hectares in Barangay Malatagao, Bataraza, Palawan. The MPSA and EP were then transferred to Madridejos
Mining Corporation (MMC) and, on November 6, 2006, assigned to petitioner McArthur.2
1
Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation and Patricia Louise
Mining & Development Corporation (PLMDC) which previously filed an application for an MPSA with the MGB,
Region IV-B, DENR on January 6, 1992. Through the said application, the DENR issued MPSA-IV-1-12 covering
an area of 3.277 hectares in barangays Calategas and San Isidro, Municipality of Narra, 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 IV-B, labeled as MPSA-AMA-IVB-154
(formerly EPA-IVB-47) over 3,402 hectares in Barangays Malinao and Princesa Urduja, Municipality of Narra,
Province of Palawan. SMMI subsequently conveyed, transferred and assigned its rights and interest over the
said MPSA application to Tesoro.
On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3) separate
petitions for the denial of petitioners’ applications for MPSA designated as AMA-IVB-153, AMA-IVB-154 and
MPSA IV-1-12.
In the petitions, Redmont alleged that at least 60% of the capital stock of McArthur, Tesoro and Narra are
owned and controlled by MBMI Resources, Inc. (MBMI), a 100% Canadian corporation. Redmont reasoned that
since MBMI is a considerable stockholder of petitioners, it was the driving force behind petitioners’ filing of the
MPSAs over the areas covered by applications since it knows that it can only participate in mining activities
through corporations which are deemed Filipino citizens. Redmont argued that given that petitioners’ capital
stocks were mostly owned by MBMI, they were likewise disqualified from engaging in mining activities through
MPSAs, which are reserved only for Filipino citizens.
In their Answers, petitioners averred that they were qualified persons under Section 3(aq) of Republic Act No.
(RA) 7942 or the Philippine Mining Act of 1995 which provided:
Sec. 3 Definition of Terms. As used in and for purposes of this Act, the following terms, whether in singular or
plural, shall mean:
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
2
technical and financial capability to undertake mineral resources development and duly registered in accordance
with law at least sixty per cent (60%) of the capital of which is owned by citizens of the Philippines: Provided,
That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting
an exploration permit, financial or technical assistance agreement or mineral processing permit.
Additionally, they stated that their nationality as applicants is immaterial because they also applied for Financial
or Technical Assistance Agreements (FTAA) denominated as AFTA-IVB-09 for McArthur, AFTA-IVB-08 for Tesoro
and AFTA-IVB-07 for Narra, which are granted to foreign-owned corporations. Nevertheless, they claimed that
the issue on nationality should not be raised since McArthur, Tesoro and Narra are in fact Philippine Nationals as
60% of their capital is owned by citizens of the Philippines. They asserted that though MBMI owns 40% of the
shares of PLMC (which owns 5,997 shares of Narra),3 40% of the shares of MMC (which owns 5,997 shares of
McArthur)4 and 40% of the shares of SLMC (which, in turn, owns 5,997 shares of Tesoro),5 the shares of MBMI
will not make it the owner of at least 60% of the capital stock of each of petitioners. They added that the best
tool used in determining the nationality of a corporation is the "control test," embodied in Sec. 3 of RA 7042 or
the Foreign Investments Act of 1991. They also claimed that the POA of DENR did not have jurisdiction over the
issues in Redmont’s petition since they are not enumerated in Sec. 77 of RA 7942. Finally, they stressed that
Redmont has no personality to sue them because it has no pending claim or application over the areas applied
for by petitioners.
On December 14, 2007, the POA issued a Resolution disqualifying petitioners from gaining MPSAs. It held:
[I]t is clearly established that respondents are not qualified applicants to engage in mining activities. On the
other hand, [Redmont] having filed its own applications for an EPA over the areas earlier covered by the MPSA
application of respondents may be considered if and when they are qualified under the law. The violation of the
requirements for the issuance and/or grant of permits over mining areas is clearly established thus, there is
reason to believe that the cancellation and/or revocation of permits already issued under the premises is in
order and open the areas covered to other qualified applicants.
xxxx
WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur Mining Inc., Tesoro Mining and
Development, Inc., and Narra Nickel Mining and Development Corp. as, DISQUALIFIED for being considered as
Foreign Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby x x x DECLARED NULL
AND VOID.6
3
The POA considered petitioners as foreign corporations being "effectively controlled" by MBMI, a 100%
Canadian company and declared their MPSAs null and void. In the same Resolution, it gave due course to
Redmont’s EPAs. Thereafter, on February 7, 2008, the POA issued an Order7 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 Appeal8 and
Memorandum of Appeal9 with the Mines Adjudication Board (MAB) while Narra separately filed its Notice of
Appeal10 and Memorandum of Appeal.11
In their respective memorandum, petitioners emphasized that they are qualified persons under the law. Also,
through a letter, they informed the MAB that they had their individual MPSA applications converted to FTAAs.
McArthur’s FTAA was denominated as AFTA-IVB-0912 on May 2007, while Tesoro’s MPSA application was
converted to AFTA-IVB-0813 on May 28, 2007, and Narra’s FTAA was converted to AFTA-IVB-0714 on March 30,
2006.
Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a Complaint15 with the
Securities and Exchange Commission (SEC), seeking the revocation of the certificates for registration of
petitioners on the ground that they are foreign-owned or controlled corporations engaged in mining in violation
of Philippine laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and Motion to Suspend
Proceeding before the MAB praying for the suspension of the proceedings on the appeals filed by McArthur,
Tesoro and Narra.
Subsequently, on September 8, 2008, Redmont filed before the Regional Trial Court of Quezon City, Branch 92
(RTC) a Complaint16 for injunction with application for issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction, docketed as Civil Case No. 08-63379. Redmont prayed for the deferral of the MAB
proceedings pending the resolution of the Complaint before the SEC.
But before the RTC can resolve Redmont’s Complaint and applications for injunctive reliefs, the MAB issued an
Order on September 10, 2008, finding the appeal meritorious. It held:
WHEREFORE, in view of the foregoing, the Mines Adjudication Board hereby REVERSES and SETS ASIDE the
Resolution dated 14 December 2007 of the Panel of Arbitrators of Region IV-B (MIMAROPA) in POA-DENR Case
Nos. 2001-01, 2007-02 and 2007-03, and its Order dated 07 February 2008 denying the Motions for
4
Reconsideration of the Appellants. The Petition filed by Redmont Consolidated Mines Corporation on 02 January
2007 is hereby ordered DISMISSED.17
Belatedly, on September 16, 2008, the RTC issued an Order18 granting Redmont’s application for a TRO and
setting the case for hearing the prayer for the issuance of a writ of preliminary injunction on September 19,
2008.
Meanwhile, on September 22, 2008, Redmont filed a Motion for Reconsideration19 of the September 10, 2008
Order of the MAB. Subsequently, it filed a Supplemental Motion for Reconsideration20 on September 29, 2008.
Before the MAB could resolve Redmont’s Motion for Reconsideration and Supplemental Motion for
Reconsideration, Redmont filed before the RTC a Supplemental Complaint21 in Civil Case No. 08-63379.
On October 6, 2008, the RTC issued an Order22 granting the issuance of a writ of preliminary injunction
enjoining the MAB from finally disposing of the appeals of petitioners and from resolving Redmont’s Motion for
Reconsideration and Supplement Motion for Reconsideration of the MAB’s September 10, 2008 Resolution.
On July 1, 2009, however, the MAB issued a second Order denying Redmont’s Motion for Reconsideration and
Supplemental Motion for Reconsideration and resolving the appeals filed by petitioners.
Hence, the petition for review filed by Redmont before the CA, assailing the Orders issued by the MAB. On
October 1, 2010, the CA rendered a Decision, the dispositive of which reads:
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders, dated September 10, 2008 and July 1,
2009 of the Mining Adjudication Board are reversed and set aside. The findings of the Panel of Arbitrators of the
Department of Environment and Natural Resources that respondents McArthur, Tesoro and Narra are foreign
corporations is upheld and, therefore, the rejection of their applications for Mineral Product Sharing Agreement
should be recommended to the Secretary of the DENR.
With respect to the applications of respondents McArthur, Tesoro and Narra for Financial or Technical Assistance
Agreement (FTAA) or conversion of their MPSA applications to FTAA, the matter for its rejection or approval is
left for determination by the Secretary of the DENR and the President of the Republic of the Philippines.
SO ORDERED.23
5
In a Resolution dated February 15, 2011, the CA denied the Motion for Reconsideration filed by petitioners.
After a careful review of the records, the CA found that there was doubt as to the nationality of petitioners when
it realized that petitioners had a common major investor, MBMI, a corporation composed of 100% Canadians.
Pursuant to the first sentence of paragraph 7 of Department of Justice (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 exploitation of natural resources, the CA used the "grandfather rule" to determine the nationality of
petitioners. It provided:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall
be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a corporation or
partnership at least 60% of the capital stock or capital, respectively, of which belong to Filipino citizens, all of
the shares shall be recorded as owned by Filipinos. But if less than 60%, or say, 50% of the capital stock or
capital of the corporation or partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall be
recorded as belonging to aliens.24 (emphasis supplied)
In determining the nationality of petitioners, the CA looked into their corporate structures and their
corresponding common shareholders. Using the grandfather rule, the CA discovered that MBMI in effect owned
majority of the common stocks of the petitioners as well as at least 60% equity interest of other majority
shareholders of petitioners through joint venture agreements. The CA found that through a "web of corporate
layering, it is clear that one common controlling investor in all mining corporations involved x x x is
MBMI."25 Thus, it concluded that petitioners McArthur, Tesoro and Narra are also in partnership with, or privies-
in-interest of, MBMI.
Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into FTAA applications
suspicious in nature and, as a consequence, it recommended the rejection of petitioners’ MPSA applications by
the Secretary of the DENR.
With regard to the settlement of disputes over rights to mining areas, the CA pointed out that the POA has
jurisdiction over them and that it also has the power to determine the of nationality of petitioners as a
prerequisite of the Constitution prior the conferring of rights to "co-production, joint venture or production-
sharing agreements" of the state to mining rights. However, it also stated that the POA’s jurisdiction is limited
6
only to the resolution of the dispute and not on the approval or rejection of the MPSAs. It stipulated that only
the Secretary of the DENR is vested with the power to approve or reject applications for MPSA.
Finally, the CA upheld the findings of the POA in its December 14, 2007 Resolution which considered petitioners
McArthur, Tesoro and Narra as foreign corporations. Nevertheless, the CA determined that the POA’s declaration
that the MPSAs of McArthur, Tesoro and Narra are void is highly improper.
While the petition was pending with the CA, Redmont filed with the Office of the President (OP) a petition dated
May 7, 2010 seeking the cancellation of petitioners’ FTAAs. The OP rendered a Decision26 on April 6, 2011,
wherein it canceled and revoked petitioners’ FTAAs for violating and circumventing the "Constitution x x x[,] the
Small Scale Mining Law and Environmental Compliance Certificate as well as Sections 3 and 8 of the Foreign
Investment Act and E.O. 584."27 The OP, in affirming the cancellation of the issued FTAAs, agreed with Redmont
stating that petitioners committed violations against the abovementioned laws and failed to submit evidence to
negate them. The Decision further quoted the December 14, 2007 Order of the POA focusing on the alleged
misrepresentation and claims made by petitioners of being domestic or Filipino corporations and the admitted
continued mining operation of PMDC using their locally secured Small Scale Mining Permit inside the area earlier
applied for an MPSA application which was eventually transferred to Narra. It also agreed with the POA’s
estimation that the filing of the FTAA applications by petitioners is a clear admission that they are "not capable
of conducting a large scale mining operation and that they need the financial and technical assistance of a
foreign entity in their operation, that is why they sought the participation of MBMI Resources, Inc."28 The
Decision further quoted:
The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate the
violations and lack of qualification of the respondent corporations to engage in mining. The filing of the FTAA
application conversion which is allowed foreign corporation of the earlier MPSA is an admission that indeed the
respondent is not Filipino but rather of foreign nationality who is disqualified under the laws. Corporate
documents of MBMI Resources, Inc. furnished its stockholders in their head office in Canada suggest that they
are conducting operation only through their local counterparts.29
The Motion for Reconsideration of the Decision was further denied by the OP in a Resolution30 dated July 6,
2011. Petitioners then filed a Petition for Review on Certiorari of the OP’s Decision and Resolution with the CA,
docketed as CA-G.R. SP No. 120409. In the CA Decision dated February 29, 2012, the CA affirmed the Decision
and Resolution of the OP. Thereafter, petitioners appealed the same CA decision to this Court which is now
pending with a different division.
7
Thus, the instant petition for review against the October 1, 2010 Decision of the CA. Petitioners put forth the
following errors of the CA:
I.
The Court of Appeals erred when it did not dismiss the case for mootness despite the fact that the subject
matter of the controversy, the MPSA Applications, have already been converted into FTAA applications
and that the same have already been granted.
II.
The Court of Appeals erred when it did not dismiss the case for lack of jurisdiction considering that the
Panel of Arbitrators has no jurisdiction to determine the nationality of Narra, Tesoro and McArthur.
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
"Grandfather Rule" is contrary to law, particularly the express mandate of the Foreign Investments Act of
1991, as amended, and the FIA Rules.
V.
The Court of Appeals erred when it applied the exceptions to the res inter alios acta rule.
VI.
The Court of Appeals erred when it concluded that the conversion of the MPSA Applications into FTAA
Applications were of "suspicious nature" as the same is based on mere conjectures and surmises without
any shred of evidence to show the same.31
8
We find the petition to be without merit.
This case not moot and academic
The claim of petitioners that the CA erred in not rendering the instant case as moot is without merit.
Basically, a case is said to be moot and/or academic when it "ceases to present a justiciable controversy by
virtue of supervening events, so that a declaration thereon would be of no practical use or value."32 Thus, the
courts "generally decline jurisdiction over the case or dismiss it on the ground of mootness."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.
Macapagal-Arroyo (David), the Court provided four instances where courts can decide an otherwise moot case,
thus:
1.) There is a grave violation of the Constitution;
2.) The exceptional character of the situation and paramount public interest is involved;
3.) When constitutional issue raised requires formulation of controlling principles to guide the bench, the
bar, and the public; and
4.) The case is capable of repetition yet evading review.34
All of the exceptions stated above are present in the instant case. We of this Court note that a grave violation of
the Constitution, specifically Section 2 of Article XII, is being committed by a foreign corporation right under our
country’s nose through a myriad of corporate layering under different, allegedly, Filipino corporations. The
intricate corporate layering utilized by the Canadian company, MBMI, is of exceptional character and involves
paramount public interest since it undeniably affects the exploitation of our Country’s natural resources. The
corresponding actions of petitioners during the lifetime and existence of the instant case raise questions as what
principle is to be applied to cases with similar issues. No definite ruling on such principle has been pronounced
by the Court; hence, the disposition of the issues or errors in the instant case will serve as a guide "to the
bench, the bar and the public."35 Finally, the instant case is capable of repetition yet evading review, since the
Canadian company, MBMI, can keep on utilizing dummy Filipino corporations through various schemes of
9
corporate layering and conversion of applications to skirt the constitutional prohibition against foreign mining in
Philippine soil.
Conversion of MPSA applications to FTAA applications
We shall discuss the first error in conjunction with the sixth error presented by petitioners since both involve
the conversion of MPSA applications to FTAA applications. Petitioners propound that the CA erred in ruling
against them since the questioned MPSA applications were already converted into FTAA applications; thus, the
issue on the prohibition relating to MPSA applications of foreign mining corporations is academic. Also,
petitioners would want us to correct the CA’s finding which deemed the aforementioned conversions of
applications as suspicious in nature, since it is based on mere conjectures and surmises and not supported with
evidence.
We disagree.
The CA’s analysis of the actions of petitioners after the case was filed against them by respondent is on point.
The changing of applications by petitioners from one type to another just because a case was filed against
them, in truth, would raise not a few sceptics’ eyebrows. What is the reason for such conversion? Did the said
conversion not stem from the case challenging their citizenship and to have the case dismissed against them for
being "moot"? It is quite obvious that it is petitioners’ strategy to have the case dismissed against them for
being "moot."
Consider the history of this case and how petitioners responded to every action done by the court or
appropriate 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
applications while the case was pending before it and held:
The filing of the Financial or Technical Assistance Agreement application is a clear admission that the
respondents are not capable of conducting a large scale mining operation and that they need the financial and
technical assistance of a foreign entity in their operation that is why they sought the participation of MBMI
Resources, Inc. The participation of MBMI in the corporation only proves the fact that it is the Canadian
company that will provide the finances and the resources to operate the mining areas for the greater benefit
10
and interest of the same and not the Filipino stockholders who only have a less substantial financial stake in the
corporation.
xxxx
x x x The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate the
violations and lack of qualification of the respondent corporations to engage in mining. The filing of the FTAA
application conversion which is allowed foreign corporation of the earlier MPSA is an admission that indeed the
respondent is not Filipino but rather of foreign nationality who is disqualified under the laws. Corporate
documents of MBMI Resources, Inc. furnished its stockholders in their head office in Canada suggest that they
are conducting operation only through their local counterparts.36
On October 1, 2010, the CA rendered a Decision which partially granted the petition, reversing and setting aside
the September 10, 2008 and July 1, 2009 Orders of the MAB. In the said Decision, the CA upheld the findings of
the POA of the DENR that the herein petitioners are in fact foreign corporations thus a recommendation of the
rejection of their MPSA applications were recommended to the Secretary of the DENR. With respect to the FTAA
applications or conversion of the MPSA applications to FTAAs, the CA deferred the matter for the determination
of the Secretary of the DENR and the President of the Republic of the Philippines.37
In their Motion for Reconsideration dated October 26, 2010, petitioners prayed for the dismissal of the petition
asserting that on April 5, 2010, then President Gloria Macapagal-Arroyo signed and issued in their favor FTAA
No. 05-2010-IVB, which rendered the petition moot and academic. However, the CA, in a Resolution dated
February 15, 2011 denied their motion for being a mere "rehash of their claims and defenses."38 Standing firm
on its Decision, the CA affirmed the ruling that petitioners are, in fact, foreign corporations. On April 5, 2011,
petitioners elevated the case to us via a Petition for Review on Certiorari under Rule 45, questioning the
Decision of the CA. 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. The OP Decision also based the cancellation on the misrepresentation of facts and the
violation of the "Small Scale Mining Law and Environmental Compliance Certificate as well as Sections 3 and 8
of the Foreign Investment Act and E.O. 584."39 On July 6, 2011, the OP issued a Resolution, denying the Motion
for Reconsideration filed by the petitioners.
11
Respondent Redmont, in its Comment dated October 10, 2011, made known to the Court the fact of the OP’s
Decision and Resolution. In their Reply, petitioners chose to ignore the OP Decision and continued to reuse their
old arguments claiming that they were granted FTAAs and, thus, the case was moot. Petitioners filed a
Manifestation and Submission dated October 19, 2012,40 wherein they asserted that the present petition is moot
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
corporations fully-Filipino owned.
Again, it is quite evident that petitioners have been trying to have this case dismissed for being "moot." Their
final 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
divesting of interest by MBMI will not change the stand of this Court with respect to the nationality of
petitioners prior the suspicious change in their corporate structures. The new documents filed by petitioners are
factual evidence that this Court has no power to verify.
The only thing clear and proved in this Court is the fact that the OP declared that petitioner corporations have
violated several mining laws and made misrepresentations and falsehood in their applications for FTAA which
lead to the revocation of the said FTAAs, demonstrating that petitioners are not beyond going against or around
the law using shifty actions and strategies. Thus, in this instance, we can say that their claim of mootness is
moot in itself because their defense of conversion of MPSAs to FTAAs has been discredited by the OP Decision.
Grandfather test
The main issue in this case is centered on the issue of petitioners’ nationality, whether Filipino or foreign. In
their previous petitions, they had been adamant in insisting that they were Filipino corporations, until they
submitted their Manifestation and Submission dated October 19, 2012 where they stated the alleged change of
corporate ownership to reflect their Filipino ownership. Thus, there is a need to determine the nationality of
petitioner corporations.
Basically, there are two acknowledged tests in determining the nationality of a corporation: the control test and
the 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
enterprises engaged in the exploitation of natural resources owned by Filipino citizens, provides:
12
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall
be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a corporation or
partnership at least 60% of the capital stock or capital, respectively, of which belong to Filipino citizens, all of
the shares shall be recorded as owned by Filipinos. But if less than 60%, or say, 50% of the capital stock or
capital of the corporation or partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall be
counted as owned by Filipinos and the other 50,000 shall be recorded as belonging to aliens.
The first part of paragraph 7, DOJ Opinion No. 020, stating "shares belonging to corporations or partnerships at
least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality,"
pertains to the control test or the liberal rule. On the other hand, the second part of the DOJ Opinion which
provides, "if the percentage of the Filipino ownership in the corporation or partnership is less than 60%, only
the number of shares corresponding to such percentage shall be counted as Philippine nationality," pertains to
the stricter, more stringent grandfather rule.
Prior to this recent change of events, petitioners were constant in advocating the application of the "control
test" under RA 7042, as amended by RA 8179, otherwise known as the Foreign Investments Act (FIA), rather
than using the stricter grandfather rule. The pertinent provision under Sec. 3 of the FIA provides:
SECTION 3. Definitions. - As used in this Act:
a.) The term Philippine national shall mean a citizen of the Philippines; or a domestic partnership or association
wholly owned by the citizens of the Philippines; a corporation organized under the laws of the Philippines of
which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is wholly owned by
Filipinos or a trustee of funds for pension or other employee retirement or separation benefits, where the
trustee is a Philippine national and at least sixty percent (60%) of the fund will accrue to the benefit of
Philippine nationals: Provided, That were a corporation and its non-Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital
stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the
Philippines and at least sixty percent (60%) of the members of the Board of Directors, in order that the
corporation shall be considered a Philippine national. (emphasis supplied)
13
The grandfather rule, petitioners reasoned, has no leg to stand on in the instant case since the definition of a
"Philippine National" under Sec. 3 of the FIA does not provide for it. They further claim that the grandfather rule
"has been abandoned and is no longer the applicable rule."41 They also opined that the last portion of Sec. 3 of
the FIA admits the application of a "corporate layering" scheme of corporations. Petitioners claim that the clear
and unambiguous wordings of the statute preclude the court from construing it and prevent the court’s use of
discretion in applying the law. They said that the plain, literal meaning of the statute meant the application of
the control test is obligatory.
We disagree. "Corporate layering" is admittedly allowed by the FIA; but if it is used to circumvent the
Constitution and pertinent laws, then it becomes illegal. Further, the pronouncement of petitioners that the
grandfather rule has already been abandoned must be discredited for lack of basis.
Art. XII, Sec. 2 of the Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full control and supervision of
the State. The State may directly undertake such activities, or it may enter into co-production, joint venture or
production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be provided by
law.
xxxx
The President may enter into agreements with Foreign-owned corporations involving either technical or financial
assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral
oils according to the general terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall promote the development and
use of local scientific and technical resources. (emphasis supplied)
The emphasized portion of Sec. 2 which focuses on the State entering into different types of agreements for the
exploration, development, and utilization of natural resources with entities who are deemed Filipino due to 60
14
percent ownership of capital is pertinent to this case, since the issues are centered on the utilization of our
country’s natural resources or specifically, mining. Thus, there is a need to ascertain the nationality of
petitioners since, as the Constitution so provides, such agreements are only allowed corporations or
associations "at least 60 percent of such capital is owned by such citizens." The deliberations in the Records of
the 1986 Constitutional Commission shed light on how a citizenship of a corporation will be determined:
Mr. BENNAGEN: Did I hear right that the Chairman’s interpretation of an independent national economy is
freedom from undue foreign control? What is the meaning of undue foreign control?
MR. VILLEGAS: Undue foreign control is foreign control which sacrifices national sovereignty and the welfare of
the Filipino in the economic sphere.
MR. BENNAGEN: Why does it have to be qualified still with the word "undue"? Why not simply freedom from
foreign control? I think that is the meaning of independence, because as phrased, it still allows for foreign
control.
MR. VILLEGAS: It will now depend on the interpretation because if, for example, we retain the 60/40 possibility
in the cultivation of natural resources, 40 percent involves some control; not total control, but some control.
MR. BENNAGEN: In any case, I think in due time we will propose some amendments.
MR. VILLEGAS: Yes. But we will be open to improvement of the phraseology.
Mr. BENNAGEN: Yes.
Thank you, Mr. Vice-President.
xxxx
MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity;
namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-1/3 in Section 15.
MR. VILLEGAS: That is right.
15
MR. NOLLEDO: In teaching law, we are always faced with the question: ‘Where do we base the equity
requirement, is it on the authorized capital stock, on the subscribed capital stock, or on the paid-up capital
stock of a corporation’? Will the Committee please enlighten me on this?
MR. VILLEGAS: We have just had a long discussion with the members of the team from the UP Law Center who
provided us with a draft. The phrase that is contained here which we adopted from the UP draft is ‘60 percent of
the voting stock.’
MR. NOLLEDO: That must be based on the subscribed capital stock, because unless declared delinquent, unpaid
capital stock shall be entitled to vote.
MR. VILLEGAS: That is right.
MR. NOLLEDO: Thank you.
With respect to an investment by one corporation in another corporation, say, a corporation with 60-40 percent
equity invests in another corporation which is permitted by the Corporation Code, does the Committee adopt
the grandfather rule?
MR. VILLEGAS: Yes, that is the understanding of the Committee.
MR. NOLLEDO: Therefore, we need additional Filipino capital?
MR. VILLEGAS: Yes.42 (emphasis supplied)
It is apparent that it is the intention of the framers of the Constitution to apply the grandfather rule in cases
where corporate layering is present.
Elementary in statutory construction is when there is conflict between the Constitution and a statute, the
Constitution will prevail. In this instance, specifically pertaining to the provisions under Art. XII of the
Constitution on National Economy and Patrimony, Sec. 3 of the FIA will have no place of application. As decreed
by the honorable framers of our Constitution, the grandfather rule prevails and must be applied.
Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:
16
The above-quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation for
purposes, among others, of determining compliance with nationality requirements (the ‘Investee Corporation’).
Such manner of computation is necessary since the shares in the Investee Corporation may be owned both by
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
Corporation and, in certain instances, the Investing Corporation.
Under the above-quoted SEC Rules, there are two cases in determining the nationality of the Investee
Corporation. The first case is the ‘liberal rule’, later coined by the SEC as the Control Test in its 30 May 1990
Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, ‘(s)hares
belonging 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
ownership of the 60% (or more) Filipino stockholdings of the Investing Corporation since a corporation which is
at least 60% Filipino-owned is considered as Filipino.
The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph
7 of the 1967 SEC Rules which states, "but if the percentage of Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as
of Philippine nationality." Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing
Corporation and the Investee Corporation must be traced (i.e., "grandfathered") to determine the total
percentage of Filipino ownership.
Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing
Corporation and added to the shares directly owned in the Investee Corporation x x x.
xxxx
In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the
SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the
joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or
59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or the 59% less Filipino).
Stated differently, where the 60-40 Filipino- foreign equity ownership is not in doubt, the Grandfather Rule will
not apply. (emphasis supplied)
17
After a scrutiny of the evidence extant on record, the Court finds that this case calls for the application of the
grandfather rule since, as ruled by the POA and affirmed by the OP, doubt prevails and persists in the corporate
ownership of petitioners. Also, as found by the CA, doubt is present in the 60-40 Filipino equity ownership of
petitioners Narra, McArthur and Tesoro, since their common investor, the 100% Canadian corporation––MBMI,
funded them. However, petitioners also claim that there is "doubt" only when the stockholdings of Filipinos are
less than 60%.43
The assertion of petitioners that "doubt" only exists when the stockholdings are less than 60% fails to convince
this Court. DOJ Opinion No. 20, which petitioners quoted in their petition, only made an example of an instance
where "doubt" as to the ownership of the corporation exists. It would be ludicrous to limit the application of the
said word only to the instances where the stockholdings of non-Filipino stockholders are more than 40% of the
total stockholdings in a corporation. The corporations interested in circumventing our laws would clearly strive
to have "60% Filipino Ownership" at face value. It would be senseless for these applying corporations to state in
their respective articles of incorporation that they have less than 60% Filipino stockholders since the
applications will be denied instantly. Thus, various corporate schemes and layerings are utilized to circumvent
the application of the Constitution.
Obviously, the instant case presents a situation which exhibits a scheme employed by stockholders to
circumvent the law, creating a cloud of doubt in the Court’s mind. To determine, therefore, the actual
participation, direct or indirect, of MBMI, the grandfather rule must be used.
McArthur Mining, Inc.
To establish the actual ownership, interest or participation of MBMI in each of petitioners’ corporate structure,
they have to be "grandfathered."
As previously discussed, McArthur acquired its MPSA application from MMC, which acquired its application from
SMMI. McArthur has a capital stock of ten million pesos (PhP 10,000,000) divided into 10,000 common shares
at one thousand pesos (PhP 1,000) per share, subscribed to by the following:44
Name Nationalit Number of Amount Amount Paid

y Shares Subscribed
Madridejos Mining Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00
18
Corporation
MBMI Resources, Canadian 3,998 PhP 3,998,000.0 PhP 1,878,174.60

Inc.
Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

Esguerra
Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00
Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00
Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60

(emphasis supplied)
Interestingly, looking at the corporate structure of MMC, we take note that it has a similar structure and
composition as McArthur. In fact, it would seem that MBMI is also a major investor and "controls"45 MBMI and
also, similar nominal shareholders were present, i.e. Fernando B. Esguerra (Esguerra), Lauro L. Salazar
(Salazar), Michael T. Mason (Mason) and Kenneth Cawkell (Cawkell):
Madridejos Mining Corporation
Name Nationality Number of Shares Amount Subscribed Amount Paid
Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0
Development
Corp.
Inc.
19
Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00
Esguerra
Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00
Hernando
Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
(emphasis supplied)
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
respect to the number of shares it subscribed to. It states that Olympic entered into joint venture agreements
with several Philippine companies, wherein it holds directly and indirectly a 60% effective equity interest in the
Olympic Properties.46 Quoting the said Annual report:
On September 9, 2004, the Company and Olympic Mines & Development Corporation ("Olympic") entered into a
series of agreements including a Property Purchase and Development Agreement (the Transaction Documents)
with respect to three nickel laterite properties in Palawan, Philippines (the "Olympic Properties"). The
Transaction Documents effectively establish a joint venture between the Company and Olympic for purposes of
developing the Olympic Properties. The Company holds directly and indirectly an initial 60% interest in the joint
venture. Under certain circumstances and upon achieving certain milestones, the Company may earn up to a
100% interest, subject to a 2.5% net revenue royalty.47 (emphasis supplied)
Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered," company layering was
utilized by MBMI to gain control over McArthur. It is apparent that MBMI has more than 60% or more equity
interest in McArthur, making the latter a foreign corporation.
20
Tesoro Mining and Development, Inc.
Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten million pesos (PhP
10,000,000) divided into ten thousand (10,000) common shares at PhP 1,000 per share, as demonstrated
below:
[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/195580.pdf]]
Name Nationality Number of Amount Amount Paid
Shares Subscribed
Sara Marie Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00
Mining, Inc.
MBMI Canadian 3,998 PhP 3,998,000.00 PhP 1,878,174.60
Resources, Inc.
Esguerra
Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Agcaoili
Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60
(emphasis supplied)
21
Except for the name "Sara Marie Mining, Inc.," the table above shows exactly the same figures as the corporate
structure of petitioner McArthur, down to the last centavo. All the other shareholders are the same: MBMI,
Salazar, Esguerra, Agcaoili, Mason and Cawkell. The figures under "Nationality," "Number of Shares," "Amount
Subscribed," and "Amount Paid" are exactly the same. Delving deeper, we scrutinize SMMI’s corporate
structure:
Sara Marie Mining, Inc.
Shares Subscribed
Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0
Development
Corp.
Inc.
Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00
Esguerra
Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00
Hernando
22
Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
(emphasis supplied)
After subsequently studying SMMI’s corporate structure, it is not farfetched for us to spot the glaring similarity
between SMMI and MMC’s corporate structure. Again, the presence of identical stockholders, 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
except for the amount paid by MBMI which now reflects the amount of two million seven hundred ninety four
thousand pesos (PhP 2,794,000). Oddly, the total value of the amount paid is two million eight hundred nine
thousand nine hundred pesos (PhP 2,809,900).
Accordingly, after "grandfathering" petitioner Tesoro and factoring in Olympic’s participation in SMMI’s
corporate structure, it is clear that MBMI is in control of Tesoro and owns 60% or more equity interest in
Tesoro. This makes petitioner Tesoro a non-Filipino corporation and, thus, disqualifies it to participate in the
exploitation, utilization and development of our natural resources.
Narra Nickel Mining and Development Corporation
Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDC’s MPSA application,
whose corporate structure’s arrangement is similar to that of the first two petitioners discussed. The capital
stock of Narra is ten million pesos (PhP 10,000,000), which is divided into ten thousand common shares
(10,000) at one thousand pesos (PhP 1,000) per share, shown as follows:
Shares Subscribed
Patricia Louise Filipino 5,997 PhP 5,997,000.00 PhP 1,677,000.00
Mining &
23
Development
Corp.
MBMI Canadian 3,998 PhP 3,996,000.00 PhP 1,116,000.00
Resources, Inc.
Higinio C. Filipino 1 PhP 1,000.00 PhP 1,000.00
Mendoza, Jr.
Henry E. Filipino 1 PhP 1,000.00 PhP 1,000.00
Fernandez
Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Agcaoili
Ma. Elena A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Bocalan
Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00
Robert L. American 1 PhP 1,000.00 PhP 1,000.00
McCurdy
Total 10,000 PhP 10,000,000.00 PhP 2,800,000.00

(emphasis supplied)
Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and Esguerra, is present in this
corporate structure.
24
Patricia Louise Mining & Development Corporation
Using the grandfather method, we further look and examine PLMDC’s corporate structure:
Name Nationalit Number of Amount Amount Paid

y Shares Subscribed
Palawan Alpha South Filipino 6,596 PhP PhP 0

Resources Development 6,596,000.00
Corporation
MBMI Resources, Canadian 3,396 PhP PhP

3,396,000.00 2,796,000.00
Inc.
Higinio C. Mendoza, Jr. Filipino 1 PhP 1,000.00 PhP 1,000.00
Fernando B. Esguerra Filipino 1 PhP 1,000.00 PhP 1,000.00
Henry E. Fernandez Filipino 1 PhP 1,000.00 PhP 1,000.00
Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00
Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP PhP

10,000,000.00 2,708,174.60
(emphasis
supplied)
25
Yet again, the usual players in petitioners’ corporate structures are present. Similarly, the amount of money
paid by the 2nd tier majority stock holder, in this case, Palawan Alpha South Resources and Development Corp.
(PASRDC), is zero.
Studying MBMI’s Summary of Significant Accounting Policies dated October 31, 2005 explains the reason behind
the intricate corporate layering that MBMI immersed itself in:
JOINT VENTURES The Company’s ownership interests in various mining ventures engaged in the acquisition,
exploration and development of mineral properties in the Philippines is described as follows:
(a) Olympic Group
The Philippine companies holding the Olympic Property, and the ownership and interests therein, are as follows:
Olympic- Philippines (the "Olympic Group")
Sara Marie Mining Properties Ltd. ("Sara Marie") 33.3%
Tesoro Mining & Development, Inc. (Tesoro) 60.0%
Pursuant to the Olympic joint venture agreement the Company holds directly and indirectly an effective equity
interest in the Olympic Property of 60.0%. Pursuant to a shareholders’ agreement, the Company exercises joint
control over the companies in the Olympic Group.
(b) Alpha Group
The Philippine companies holding the Alpha Property, and the ownership interests therein, are as follows:
Alpha- Philippines (the "Alpha Group")
Patricia Louise Mining Development Inc. ("Patricia") 34.0%
Narra Nickel Mining & Development Corporation (Narra) 60.4%
26
Under a joint venture agreement the Company holds directly and indirectly an effective equity interest in the
Alpha Property of 60.4%. Pursuant to a shareholders’ agreement, the Company exercises joint control over the
companies in the Alpha Group.48 (emphasis supplied)
Concluding from the above-stated facts, it is quite safe to say that petitioners McArthur, Tesoro and Narra are
not Filipino since MBMI, a 100% Canadian corporation, owns 60% or more of their equity interests. Such
conclusion is derived from grandfathering petitioners’ corporate owners, namely: MMI, SMMI and PLMDC. Going
further and adding to the picture, MBMI’s Summary of Significant Accounting Policies statement– –regarding the
"joint venture" agreements that it entered into with the "Olympic" and "Alpha" groups––involves SMMI, Tesoro,
PLMDC and Narra. Noticeably, the ownership of the "layered" corporations boils down to MBMI, Olympic or
corporations under the "Alpha" group wherein MBMI has joint venture agreements with, practically exercising
majority control over the corporations mentioned. In effect, whether looking at the capital structure or the
underlying relationships between and among the corporations, petitioners are NOT Filipino nationals and must
be considered foreign since 60% or more of their capital stocks or equity interests are owned by MBMI.
Application of the res inter alios acta rule
Petitioners question the CA’s use of the exception of the res inter alios acta or the "admission by co-partner or
agent" rule and "admission by privies" under the Rules of Court in the instant case, by pointing out that
statements made by MBMI should not be admitted in this case since it is not a party to the case and that it is
not a "partner" of petitioners.
Secs. 29 and 31, Rule 130 of the Revised Rules of Court provide:
Sec. 29. Admission by co-partner or agent.- The act or declaration of a partner or agent of the party within the
scope of his authority and during the existence of the partnership or agency, may be given in evidence against
such party after the partnership or agency is shown by evidence other than such act or declaration itself. The
same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with
the party.
Sec. 31. Admission by privies.- Where one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence against the former.
27
Petitioners claim that before the above-mentioned Rule can be applied to a case, "the partnership relation must
be shown, and that proof of the fact must be made by evidence other than the admission itself."49 Thus,
petitioners assert that the CA erred in finding that a partnership relationship exists between them and MBMI
because, in fact, no such partnership exists.
Partnerships vs. joint venture agreements
Petitioners claim that the CA erred in applying Sec. 29, Rule 130 of the Rules by stating that "by entering into a
joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur. They challenged the conclusion of
the CA which pertains to the close characteristics of
"partnerships" and "joint venture agreements." Further, they asserted that before this particular partnership
can be formed, it should have been formally reduced into writing since the capital involved is more than three
thousand pesos (PhP 3,000). Being that there is no evidence of written agreement to form a partnership
between petitioners and MBMI, no partnership was created.
We disagree.
A partnership is defined as two or more persons who bind themselves to contribute money, property, or
industry to a common fund with the intention of dividing the profits among themselves.50 On the other hand,
joint ventures have been deemed to be "akin" to partnerships since it is difficult to distinguish between joint
ventures and partnerships. Thus:
[T]he relations of the parties to a joint venture and the nature of their association are so similar and closely
akin to a partnership that it is ordinarily held that their rights, duties, and liabilities are to be tested by rules
which are closely analogous to and substantially the same, if not exactly the same, as those which govern
partnership. In fact, it has been said that the trend in the law has been to blur the distinctions between a
partnership and a joint venture, very little law being found applicable to one that does not apply to the other.51
Though some claim that partnerships and joint ventures are totally different animals, there are very few rules
that differentiate one from the other; thus, joint ventures are deemed "akin" or similar to a partnership. In fact,
in joint venture agreements, rules and legal incidents governing partnerships are applied.52
28
Accordingly, culled from the incidents and records of this case, it can be assumed that the relationships entered
between and among petitioners and MBMI are no simple "joint venture agreements." As a rule, corporations are
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, as the intricate web of "ventures" entered into by and among petitioners and MBMI was executed to
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
partnership are present.
Considering that the relationships found between petitioners and MBMI are considered to be partnerships, then
the CA is justified in applying Sec. 29, Rule 130 of the Rules by stating that "by entering into a joint venture,
MBMI have a joint interest" with Narra, Tesoro and McArthur.
Panel of Arbitrators’ jurisdiction
We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant case. The POA has
jurisdiction to settle disputes over rights to mining areas which definitely involve the petitions filed by Redmont
against petitioners Narra, McArthur and Tesoro. Redmont, by filing its petition against petitioners, is asserting
the right of Filipinos over mining areas in the Philippines against alleged foreign-owned mining corporations.
Such claim constitutes a "dispute" found in Sec. 77 of RA 7942:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have
exclusive and original jurisdiction to hear and decide the following:
(a) Disputes involving rights to mining areas
(b) Disputes involving mineral agreements or permits
We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.:53
29
The phrase "disputes involving rights to mining areas" refers to any adverse claim, protest, or opposition to an
application for mineral agreement. The POA therefore has the jurisdiction to resolve any adverse claim, protest,
or opposition to a pending application for a mineral agreement filed with the concerned Regional Office of the
MGB. This is clear from Secs. 38 and 41 of the DENR AO 96-40, which provide:
Sec. 38.
xxxx
Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the authorized
officer(s) of the concerned office(s) shall issue a certification(s) that the publication/posting/radio
announcement have been complied with. Any adverse claim, protest, opposition shall be filed directly, within
thirty (30) calendar days from the last date of publication/posting/radio announcement, with the concerned
Regional Office or through any concerned PENRO or CENRO for filing in the concerned Regional Office for
purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of this Act and these
implementing rules and regulations. Upon final resolution of any adverse claim, protest or opposition, the Panel
of Arbitrators shall likewise issue a certification to that effect within five (5) working days from the date of
finality of resolution thereof. Where there is no adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a Certification to that effect within five working days therefrom.
xxxx
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied with and
any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.
Sec. 41.
xxxx
Within fifteen (15) working days form the receipt of the Certification issued by the Panel of Arbitrators as
provided in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral Agreement
applications in areas outside Mineral reservations. He/She shall thereafter endorse his/her findings to the
Bureau for further evaluation by the Director within fifteen (15) working days from receipt of forwarded
30
documents. Thereafter, the Director shall endorse the same to the secretary for consideration/approval within
fifteen working days from receipt of such endorsement.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working days
from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38 hereof, the same
shall be evaluated and endorsed by the Director to the Secretary for consideration/approval within fifteen days
from receipt of such endorsement. (emphasis supplied)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas" under
Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or
conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further
elucidated by Secs. 219 and 43 of DENR AO 95-936, which read:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28, 43 and
57 above, any adverse claim, protest or opposition specified in said sections may also be filed directly with the
Panel of Arbitrators within the concerned periods for filing such claim, protest or opposition as specified in said
Sections.
Sec. 43. Publication/Posting of Mineral Agreement.-
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), copy furnished the barangays where the proposed contract area is located once a week for
two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days from the
last date of publication/posting has been made and no adverse claim, protest or opposition was filed within the
said forty-five (45) days, the concerned offices shall issue a certification that publication/posting has been made
and that no adverse claim, protest or opposition of whatever nature has been filed. On the other hand, if there
be any adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last
date of publication/posting, with the Regional Offices concerned, or through the Department’s Community
Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources Officers
31
(PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However previously
published valid and subsisting mining claims are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied with and
any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators.
(Emphasis supplied.)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas" under
Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or
conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further
elucidated by Secs. 219 and 43 of DENRO AO 95-936, which reads:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28, 43 and
57 above, any adverse claim, protest or opposition specified in said sections may also be filed directly with the
Panel of Arbitrators within the concerned periods for filing such claim, protest or opposition as specified in said
Sections.
Sec. 43. Publication/Posting of Mineral Agreement Application.-
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), copy furnished the barangays where the proposed contract area is located once a week for
two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days from the
last date of publication/posting has been made and no adverse claim, protest or opposition was filed within the
said forty-five (45) days, the concerned offices shall issue a certification that publication/posting has been made
and that no adverse claim, protest or opposition of whatever nature has been filed. On the other hand, if there
be any adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last
date of publication/posting, with the Regional offices concerned, or through the Department’s Community
Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources Officers
32
(PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However, previously
published valid and subsisting mining claims are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied with and
any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators.
(Emphasis supplied.)
These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition, or
protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse claims, conflicts and
oppositions relating to applications for the grant of mineral rights.
POA’s jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it has no
authority to approve or reject said applications. Such power is vested in the DENR Secretary upon
recommendation of the MGB Director. Clearly, POA’s jurisdiction over "disputes involving rights to mining areas"
has nothing to do with the cancellation of existing mineral agreements. (emphasis ours)
Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes over
MPSA applications subject of Redmont’s petitions. However, said jurisdiction does not include either the
approval or rejection of the MPSA applications, which is vested only upon the Secretary of the DENR. Thus, the
finding of the POA, with respect to the rejection of petitioners’ MPSA applications being that they are foreign
corporation, is valid.
Justice Marvic Mario Victor F. Leonen, in his Dissent, asserts that it is the regular courts, not the POA, that has
jurisdiction over the MPSA applications of petitioners.
This postulation is incorrect.
It is basic that the jurisdiction of the court is determined by the statute in force at the time of the
commencement of the action.54
Sec. 19, Batas Pambansa Blg. 129 or "The Judiciary Reorganization
Act of 1980" reads:
33
Sec. 19. Jurisdiction in Civil Cases.—Regional Trial Courts shall exercise exclusive original jurisdiction:
1. In all civil actions in which the subject of the litigation is incapable of pecuniary estimation.
On the other hand, the jurisdiction of POA is unequivocal from Sec. 77 of RA 7942:
Section 77. Panel of Arbitrators.—
x x x Within thirty (30) days, after the submission of the case by the parties for the decision, the panel
shall have exclusive and original jurisdiction to hear and decide the following:
(c) Disputes involving rights to mining areas
(d) Disputes involving mineral agreements or permits
It is clear that POA has exclusive and original jurisdiction over any and all disputes involving rights to mining
areas. One such dispute is an MPSA application to which an adverse claim, protest or opposition is filed by
another interested applicant.1âwphi1 In the case at bar, the dispute arose or originated from MPSA applications
where 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
between the parties and it is POA’s jurisdiction to resolve said disputes.
Moreover, the jurisdiction of the RTC involves civil actions while what petitioners filed with the DENR Regional
Office or any concerned DENRE or CENRO are MPSA applications. Thus POA has jurisdiction.
Furthermore, the POA has jurisdiction over the MPSA applications under the doctrine of primary jurisdiction.
Euro-med Laboratories v. Province of Batangas55 elucidates:
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the expertise,
specialized training and knowledge of an administrative body, relief must first be obtained in an administrative
proceeding before resort to the courts is had even if the matter may well be within their proper jurisdiction.
Whatever may be the decision of the POA will eventually reach the court system via a resort to the CA and to
this Court as a last recourse.
34
Selling of MBMI’s shares to DMCI
As stated before, petitioners’ Manifestation and Submission dated October 19, 2012 would want us to declare
the instant petition moot and academic due to the transfer and conveyance of all the shareholdings and
interests of MBMI to DMCI, a corporation duly organized and existing under Philippine laws and is at least 60%
Philippine-owned.56 Petitioners reasoned that they now cannot be considered as foreign-owned; the transfer of
their shares supposedly cured the "defect" of their previous nationality. They claimed that their current FTAA
contract with the State should stand since "even wholly-owned foreign corporations can enter into an FTAA with
the State."57 Petitioners stress that there should no longer be any issue left as regards their qualification to
enter into FTAA contracts since they are qualified to engage in mining activities in the Philippines. Thus,
whether the "grandfather rule" or the "control test" is used, the nationalities of petitioners cannot be doubted
since it would pass both tests.
The sale of the MBMI shareholdings to DMCI does not have any bearing in the instant case and said fact should
be disregarded. The manifestation can no longer be considered by us since it is being tackled in G.R. No.
202877 pending before this Court.1âwphi1 Thus, the question of whether petitioners, allegedly a Philippine-
owned corporation due to the sale of MBMI's shareholdings to DMCI, are allowed to enter into FTAAs with the
State is a non-issue in this case.
In ending, the "control test" is still the prevailing mode of determining whether or not a corporation is a Filipino
corporation, within the ambit of Sec. 2, Art. II of the 1987 Constitution, entitled to undertake the exploration,
development and utilization of the natural resources of the Philippines. When in the mind of the Court there is
doubt, based on the attendant facts and circumstances of the case, in the 60-40 Filipino-equity ownership in the
corporation, then it may apply the "grandfather rule."
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Court of Appeals Decision dated
October 1, 2010 and Resolution dated February 15, 2011 are hereby AFFIRMED.
SO ORDERED.
PRESBITERO J. VELASCO, JR.

Associate Justice
WE CONCUR:
35
DIOSDADO M. PERALTA
36
G.R. No. 101897. March 5, 1993.
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS, LYCEUM OF APARRI, LYCEUM OF
CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO, INC., BUHI LYCEUM,
CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO,
INC. and WESTERN PANGASINAN LYCEUM, INC., respondents.
Quisumbing, Torres & Evangelista Law Offices and Ambrosio Padilla for petitioner.
Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan Law Offices for respondents.
Froilan Siobal for Western Pangasinan Lyceum.
SYLLABUS
1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF PROPOSED NAME WHICH IS IDENTICAL OR

CONFUSINGLY SIMILAR TO THAT OF ANY EXISTING CORPORATION, PROHIBITED; CONFUSION AND
DECEPTION EFFECTIVELY PRECLUDED BY THE APPENDING OF GEOGRAPHIC NAMES TO THE WORD "LYCEUM".
— The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation.
Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned:
"Section 18. Corporate name. — No corporate name may be allowed by the Securities an Exchange Commission
if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to
any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When
a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation
under the amended name." The policy underlying the prohibition in Section 18 against the registration of a
corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or
which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud
upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations
and duties, and the reduction of difficulties of administration and supervision over corporations. We do not
consider that the corporate names of private respondent institutions are "identical with, or deceptively or
confusingly similar" to that of the petitioner institution. True enough, the corporate names of private respondent
entities all carry the word "Lyceum" but confusion and deception are effectively precluded by the appending of
geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can be mistaken
by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan" would be
confused with the Lyceum of the Philippines.
2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD "LYCEUM," NOT ATTENDED WITH
EXCLUSIVITY. — It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary
meaning in relation to petitioner with the result that word, although originally a generic, has become
appropriable by petitioner to the exclusion of other institutions like private respondents herein. The doctrine of
secondary meaning originated in the field of trademark law. Its application has, however, been extended to
corporate names sine the right to use a corporate name to the exclusion of others is based upon the same
principle which underlies the right to use a particular trademark or tradename. In Philippine Nut Industry, Inc.
v. Standard Brands, Inc., the doctrine of secondary meaning was elaborated in the following terms: " . . . a
word or phrase originally incapable of exclusive appropriation with reference to an article on the market,
because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his product." The question which arises, therefore, is
whether or not the use by petitioner of "Lyceum" in its corporate name has been for such length of time and
with such exclusivity as to have become associated or identified with the petitioner institution in the mind of the
general public (or at least that portion of the general public which has to do with schools). The Court of Appeals
recognized this issue and answered it in the negative: "Under the doctrine of secondary meaning, a word or
phrase originally incapable of exclusive appropriation with reference to an article in the market, because
geographical or otherwise descriptive might nevertheless have been used so long and so exclusively by one
producer with reference to this article that, in that trade and to that group of the purchasing public, the word or
phrase has come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This
circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through
the substantial and exclusive use of the same for a considerable period of time. . . . No evidence was ever
presented in the hearing before the Commission which sufficiently proved that the word 'Lyceum' has indeed
acquired secondary meaning in favor of the appellant. If there was any of this kind, the same tend to prove only
that the appellant had been using the disputed word for a long period of time. . . . In other words, while the
appellant may have proved that it had been using the word 'Lyceum' for a long period of time, this fact alone
did not amount to mean that the said word had acquired secondary meaning in its favor because the appellant
failed to prove that it had been using the same word all by itself to the exclusion of others. More so, there was
no evidence presented to prove that confusion will surely arise if the same word were to be used by other
educational institutions. Consequently, the allegations of the appellant in its first two assigned errors must
necessarily fail." We agree with the Court of Appeals. The number alone of the private respondents in the case
at bar suggests strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity
essential for applicability of the doctrine of secondary meaning. Petitioner's use of the word "Lyceum" was not
exclusive but was in truth shared with the Western Pangasinan Lyceum and a little later with other private
respondent institutions which registered with the SEC using "Lyceum" as part of their corporation names. There
may well be other schools using Lyceum or Liceo in their names, but not registered with the SEC because they
have not adopted the corporate form of organization.
3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO DETERMINE WHETHER THEY ARE CONFUSINGLY OR
DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY'S NAME. — petitioner institution is not entitled to a
legally enforceable exclusive right to use the word "Lyceum" in its corporate name and that other institutions
may use "Lyceum" as part of their corporate names. To determine whether a given corporate name is
"identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to
ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their
entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not
reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.
DECISION
FELICIANO, J p:
Petitioner is an educational institution duly registered with the Securities and Exchange Commission ("SEC").
When it first registered with the SEC on 21 September 1950, it used the corporate name Lyceum of the
Philippines, Inc. and has used that name ever since.
On 24 February 1984, petitioner instituted proceedings before the SEC to compel the private respondents,
which are also educational institutions, to delete the word "Lyceum" from their corporate names and
permanently to enjoin them from using "Lyceum" as part of their respective names.
Some of the private respondents actively participated in the proceedings before the SEC. These are the
following, the dates of their original SEC registration being set out below opposite their respective names:
Western Pangasinan Lyceum — 27 October 1950
Lyceum of Cabagan — 31 October 1962

Lyceum of Lallo, Inc. — 26 March 1972
Lyceum of Aparri — 28 March 1972
Lyceum of Tuao, Inc. — 28 March 1972
Lyceum of Camalaniugan — 28 March 1972
The following private respondents were declared in default for failure to file an answer despite service of
summons:
Buhi Lyceum;
Central Lyceum of Catanduanes;
Lyceum of Eastern Mindanao, Inc.; and
Lyceum of Southern Philippines
Petitioner's original complaint before the SEC had included three (3) other entities:
1. The Lyceum of Malacanay;
2. The Lyceum of Marbel; and
3. The Lyceum of Araullo
The complaint was later withdrawn insofar as concerned the Lyceum of Malacanay and the Lyceum of Marbel,
for failure to serve summons upon these two (2) entities. The case against the Liceum of Araullo was dismissed
when that school motu proprio change its corporate name to "Pamantasan ng Araullo."
The background of the case at bar needs some recounting. Petitioner had sometime before commenced in the
SEC a proceeding (SEC-Case No. 1241) against the Lyceum of Baguio, Inc. to require it to change its corporate
name and to adopt another name not "similar [to] or identical" with that of petitioner. In an Order dated 20
April 1977, Associate Commissioner Julio Sulit held that the corporate name of petitioner and that of the
Lyceum of Baguio, Inc. were substantially identical because of the presence of a "dominant" word, i.e.,
"Lyceum," the name of the geographical location of the campus being the only word which distinguished one
from the other corporate name. The SEC also noted that petitioner had registered as a corporation ahead of the
Lyceum of Baguio, Inc. in point of time, 1 and ordered the latter to change its name to another name "not
similar or identical [with]" the names of previously registered entities.
The Lyceum of Baguio, Inc. assailed the Order of the SEC before the Supreme Court in a case docketed as G.R.
No. L-46595. In a Minute Resolution dated 14 September 1977, the Court denied the Petition for Review for
lack of merit. Entry of judgment in that case was made on 21 October 1977. 2
Armed with the Resolution of this Court in G.R. No. L-46595, petitioner then wrote all the educational
institutions it could find using the word "Lyceum" as part of their corporate name, and advised them to
discontinue such use of "Lyceum." When, with the passage of time, it became clear that this recourse had
failed, petitioner instituted before the SEC SEC-Case No. 2579 to enforce what petitioner claims as its
proprietary right to the word "Lyceum." The SEC hearing officer rendered a decision sustaining petitioner's claim
to an exclusive right to use the word "Lyceum." The hearing officer relied upon the SEC ruling in the Lyceum of
Baguio, Inc. case (SEC-Case No. 1241) and held that the word "Lyceum" was capable of appropriation and that
petitioner had acquired an enforceable exclusive right to the use of that word.
On appeal, however, by private respondents to the SEC En Banc, the decision of the hearing officer was
reversed and set aside. The SEC En Banc did not consider the word "Lyceum" to have become so identified with
petitioner as to render use thereof by other institutions as productive of confusion about the identity of the
schools concerned in the mind of the general public. Unlike its hearing officer, the SEC En Banc held that the
attaching of geographical names to the word "Lyceum" served sufficiently to distinguish the schools from one
another, especially in view of the fact that the campuses of petitioner and those of the private respondents
were physically quite remote from each other. 3
Petitioner then went on appeal to the Court of Appeals. In its Decision dated 28 June 1991, however, the Court
of Appeals affirmed the questioned Orders of the SEC En Banc. 4 Petitioner filed a motion for reconsideration,
without success.
Before this Court, petitioner asserts that the Court of Appeals committed the following errors:
1. The Court of Appeals erred in holding that the Resolution of the Supreme Court in G.R. No. L-46595 did not
constitute stare decisis as to apply to this case and in not holding that said Resolution bound subsequent
determinations on the right to exclusive use of the word Lyceum.
2. The Court of Appeals erred in holding that respondent Western Pangasinan Lyceum, Inc. was incorporated
earlier than petitioner.
3. The Court of Appeals erred in holding that the word Lyceum has not acquired a secondary meaning in favor
of petitioner.
4. The Court of Appeals erred in holding that Lyceum as a generic word cannot be appropriated by the
petitioner to the exclusion of others. 5
We will consider all the foregoing ascribed errors, though not necessarily seriatim. We begin by noting that the
Resolution of the Court in G.R. No. L-46595 does not, of course, constitute res adjudicata in respect of the case
at bar, since there is no identity of parties. Neither is stare decisis pertinent, if only because the SEC En Banc
itself has re-examined Associate Commissioner Sulit's ruling in the Lyceum of Baguio case. The Minute
Resolution of the Court in G.R. No. L-46595 was not a reasoned adoption of the Sulit ruling.
The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation. 6
Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned:
"SECTION 18. Corporate name. — No corporate name may be allowed by the Securities an Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to
existing laws. When a change in the corporate name is approved, the Commission shall issue an amended
certificate of incorporation under the amended name." (Emphasis supplied)
The policy underlying the prohibition in Section 18 against the registration of a corporate name which is
"identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently
deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which
would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the
reduction of difficulties of administration and supervision over corporations. 7
We do not consider that the corporate names of private respondent institutions are "identical with, or
deceptively or confusingly similar" to that of the petitioner institution. True enough, the corporate names of
private respondent entities all carry the word "Lyceum" but confusion and deception are effectively precluded by
the appending of geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri"
can be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan"
would be confused with the Lyceum of the Philippines.
Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion which in turn referred to a locality on
the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and adorned with fountains and
buildings erected by Pisistratus, Pericles and Lycurgus frequented by the youth for exercise and by the
philosopher Aristotle and his followers for teaching." 8 In time, the word "Lyceum" became associated with
schools and other institutions providing public lectures and concerts and public discussions. Thus today, the
word "Lyceum" generally refers to a school or an institution of learning. While the Latin word "lyceum" has been
incorporated into the English language, the word is also found in Spanish (liceo) and in French (lycee). As the
Court of Appeals noted in its Decision, Roman Catholic schools frequently use the term; e.g., "Liceo de Manila,"
"Liceo de Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de Albay." 9 "Lyceum" is in fact as generic in
character as the word "university." In the name of the petitioner, "Lyceum" appears to be a substitute for
"university;" in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently denotes a secondary school or
a college. It may be (though this is a question of fact which we need not resolve) that the use of the word
"Lyceum" may not yet be as widespread as the use of "university," but it is clear that a not inconsiderable
number of educational institutions have adopted "Lyceum" or "Liceo" as part of their corporate names. Since
"Lyceum" or "Liceo" denotes a school or institution of learning, it is not unnatural to use this word to designate
an entity which is organized and operating as an educational institution.
It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary meaning in relation to
petitioner with the result that that word, although originally a generic, has become appropriable by petitioner to
the exclusion of other institutions like private respondents herein.
The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been
extended to corporate names sine the right to use a corporate name to the exclusion of others is based upon
the same principle which underlies the right to use a particular trademark or tradename. 10 In Philippine Nut
Industry, Inc. v. Standard Brands, Inc., 11 the doctrine of secondary meaning was elaborated in the following
terms:
" . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market,
because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his product." 12
The question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its corporate name
has been for such length of time and with such exclusivity as to have become associated or identified with the
petitioner institution in the mind of the general public (or at least that portion of the general public which has to
do with schools). The Court of Appeals recognized this issue and answered it in the negative:
"Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market, because geographical or otherwise descriptive might nevertheless have
been used so long and so exclusively by one producer with reference to this article that, in that trade and to
that group of the purchasing public, the word or phrase has come to mean that the article was his produce (Ana
Ang vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the distinctiveness into which
the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period
of time. Consequently, the same doctrine or principle cannot be made to apply where the evidence did not
prove that the business (of the plaintiff) has continued for so long a time that it has become of consequence
and acquired a good will of considerable value such that its articles and produce have acquired a well-known
reputation, and confusion will result by the use of the disputed name (by the defendant) (Ang Si Heng vs.
Wellington Department Store, Inc., 92 Phil. 448).
With the foregoing as a yardstick, [we] believe the appellant failed to satisfy the aforementioned requisites. No
evidence was ever presented in the hearing before the Commission which sufficiently proved that the word
'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If there was any of this kind, the
same tend to prove only that the appellant had been using the disputed word for a long period of time.
Nevertheless, its (appellant) exclusive use of the word (Lyceum) was never established or proven as in fact the
evidence tend to convey that the cross-claimant was already using the word 'Lyceum' seventeen (17) years
prior to the date the appellant started using the same word in its corporate name. Furthermore, educational
institutions of the Roman Catholic Church had been using the same or similar word like 'Liceo de Manila,' 'Liceo
de Baleno' (in Baleno, Masbate), 'Liceo de Masbate,' 'Liceo de Albay' long before appellant started using the
word 'Lyceum'. The appellant also failed to prove that the word 'Lyceum' has become so identified with its
educational institution that confusion will surely arise in the minds of the public if the same word were to be
used by other educational institutions.
In other words, while the appellant may have proved that it had been using the word 'Lyceum' for a long period
of time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor
because the appellant failed to prove that it had been using the same word all by itself to the exclusion of
others. More so, there was no evidence presented to prove that confusion will surely arise if the same word
were to be used by other educational institutions. Consequently, the allegations of the appellant in its first two
assigned errors must necessarily fail." 13 (Underscoring partly in the original and partly supplied)
We agree with the Court of Appeals. The number alone of the private respondents in the case at bar suggests
strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity essential for
applicability of the doctrine of secondary meaning. It may be noted also that at least one of the private
respondents, i.e., the Western Pangasinan Lyceum, Inc., used the term "Lyceum" seventeen (17) years before
the petitioner registered its own corporate name with the SEC and began using the word "Lyceum." It follows
that if any institution had acquired an exclusive right to the word "Lyceum," that institution would have been
the Western Pangasinan Lyceum, Inc. rather than the petitioner institution.
In this connection, petitioner argues that because the Western Pangasinan Lyceum, Inc. failed to reconstruct its
records before the SEC in accordance with the provisions of R.A. No. 62, which records had been destroyed
during World War II, Western Pangasinan Lyceum should be deemed to have lost all rights it may have acquired
by virtue of its past registration. It might be noted that the Western Pangasinan Lyceum, Inc. registered with
the SEC soon after petitioner had filed its own registration on 21 September 1950. Whether or not Western
Pangasinan Lyceum, Inc. must be deemed to have lost its rights under its original 1933 registration, appears to
us to be quite secondary in importance; we refer to this earlier registration simply to underscore the fact that
petitioner's use of the word "Lyceum" was neither the first use of that term in the Philippines nor an exclusive
use thereof. Petitioner's use of the word "Lyceum" was not exclusive but was in truth shared with the Western
Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC
using "Lyceum" as part of their corporation names. There may well be other schools using Lyceum or Liceo in
their names, but not registered with the SEC because they have not adopted the corporate form of
organization.
We conclude and so hold that petitioner institution is not entitled to a legally enforceable exclusive right to use
the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their
corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively
similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo"
in both names. One must evaluate corporate names in their entirety and when the name of petitioner is
juxtaposed with the names of private respondents, they are not reasonably regarded as "identical" or
"confusingly or deceptively similar" with each other.
WHEREFORE, the petitioner having failed to show any reversible error on the part of the public respondent
Court of Appeals, the Petition for Review is DENIED for lack of merit, and the Decision of the Court of Appeals
dated 28 June 1991 is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
FIRST DIVISION
G.R. No. 205548, February 07, 2018
DE LA SALLE MONTESSORI INTERNATIONAL OF MALOLOS, INC., Petitioner, v. DE LA SALLE

BROTHERS, INC., DE LA SALLE UNIVERSITY, INC., LA SALLE ACADEMY, INC., DE LA SALLE-
SANTIAGO ZOBEL SCHOOL, INC. (FORMERLY NAMED DE LA SALLE-SOUTH INC.), DE LA SALLE
CANLUBANG, INC. (FORMERLY NAMED DE LA SALLE UNIVERSITY-CANLUBANG, INC.), Respondents.
DECISION
JARDELEZA, J.:
Petitioner De La Salle Montessori International of Malolos, Inc. filed this petition for review
on certiorari1 under Rule 45 of the Rules of Court to challenge the Decision2 of the Court of Appeals (CA)
dated September 27, 2012 in CA-G.R. SP No. 116439 and its Resolution3 dated January 21, 2013 which
denied petitioner's motion for reconsideration. The CA affirmed the Decision4 of the Securities and
Exchange Commission (SEC) En Banc dated September 30, 2010, which in turn affirmed the Order5 of the
SEC Office of the General Counsel (OGC) dated May 12, 2010 directing petitioner to change or modify its
corporate name.
Petitioner reserved with the SEC its corporate name De La Salle Montessori International Malolos, Inc. from
June 4 to August 3, 2007,6 after which the SEC indorsed petitioner's articles of incorporation and by-laws to
the Department of Education (DepEd) for comments and recommendation.7 The DepEd returned the
indorsement without objections.8 Consequently, the SEC issued a certificate of incorporation to petitioner.9
Afterwards, DepEd Region III, City of San Fernando, Pampanga granted petitioner government recognition
for its pre-elementary and elementary courses on June 30, 2008,10 and for its secondary courses on
February 15, 2010.11
On January 29, 2010, respondents De La Salle Brothers, Inc., De La Salle University, Inc., La Salle
Academy, Inc., De La Salle-Santiago Zobel School, Inc. (formerly De La Salle-South, Inc.), and De La Salle
Canlubang, Inc. (formerly De La Salle University-Canlubang, Inc.) filed a petition with the SEC seeking to
compel petitioner to change its corporate name. Respondents claim that petitioner's corporate name is
misleading or confusingly similar to that which respondents have acquired a prior right to use, and that
respondents' consent to use such name was not obtained. According to respondents, petitioner's use of the
dominant phrases "La Salle" and "De La Salle" gives an erroneous impression that De La Salle Montessori
International of Malolos, Inc. is part of the "La Salle" group, which violates Section 18 of the Corporation
Code of the Philippines. Moreover, being the prior registrant, respondents have acquired the use of said
phrases as part of their corporate names and have freedom from infringement of the same.12
On May 12, 2010, the SEC OGC issued an Order13 directing petitioner to change or modify its corporate
name. It held, among others, that respondents have acquired the right to the exclusive use of the name
"La Salle" with freedom from infringement by priority of adoption, as they have all been incorporated using
the name ahead of petitioner. Furthermore, the name "La Salle" is not generic in that it does not
particularly refer to the basic or inherent nature of the services provided by respondents. Neither is it
descriptive in the sense that it does not forthwith and clearly convey an immediate idea of what
respondents' services are. In fact, it merely gives a hint, and requires imagination, thought and perception
to reach a conclusion as to the nature of such services. Hence, the SEC OGC concluded that respondents'
use of the phrase "De La Salle" or "La Salle" is arbitrary, fanciful, whimsical and distinctive, and thus legally
protectable. As regards petitioner's argument that its use of the name does not result to confusion, the SEC
OGC held otherwise, noting that confusion is probably or likely to occur considering not only the similarity
in the parties' names but also the business or industry they are engaged in, which is providing courses of
study in pre-elementary, elementary and secondary education.14 The SEC OGC disagreed with petitioner's
argument that the case of Lyceum of the Philippines, Inc. v. Court of Appeals 15 (Lyceum of the Philippines)
applies since the word "lyceum" is clearly descriptive of the very being and defining purpose of an
educational corporation, unlike the term "De La Salle" or "La Salle."16 Hence, the Court held in that case
that the Lyceum of the Philippines, Inc. cannot claim exclusive use of the name "lyceum."
Petitioner filed an appeal before the SEC En Banc, which rendered a Decision17 on September 30, 2010
affirming the Order of the SEC OGC. It held, among others, that the Lyceum of the Philippines case does
not apply since the word "lyceum" is a generic word that pertains to a category of educational institutions
and is widely used around the world. Further, the Lyceum of the Philippines failed to prove that "lyceum"
acquired secondary meaning capable of exclusive appropriation. Petitioner also failed to establish that the
term "De La Salle" is generic for the principle enunciated in Lyceum of the Philippines to apply.18
Petitioner consequently filed a petition for review with the CA. On September 27, 2012, the CA rendered its
Decision19 affirming the Order of the SEC OGC and the Decision of the SEC En Banc in toto.
Hence, this petition, which raises the lone issue of "[w]hether or not the [CA] acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction when it erred in not applying the doctrine laid down
in the case of [Lyceum of the Philippines], that LYCEUM is not attended with exclusivity."20
The Court cannot at the outset fail to note the erroneous wording of the issue. Petitioner alleged grave
abuse of discretion while also attributing error of judgment on the part of the CA in not applying a certain
doctrine. Certainly, these grounds do not coincide in the same remedy. A petition for review
on certiorari under Rule 45 of the Rules of Court is a separate remedy from a petition for certiorari under
Rule 65. A petition for review on certiorari under Rule 45 brings up for review errors of judgment, while a
petition for certiorari under Rule 65 covers errors of jurisdiction or grave abuse of discretion amounting to
excess or lack of jurisdiction. Grave abuse of discretion is not an allowable ground under Rule
45.21 Nonetheless, as the petition argues on the basis of errors of judgment allegedly committed by the CA,
the Court will excuse the error in terminology.
The main thrust of the petition is that the CA erred in not applying the ruling in the Lyceum of the
Philippines case which petitioner argues have "the same facts and events"22 as in this case.
We DENY the petition and uphold the Decision of the CA.
As early as Western Equipment and Supply Co. v. Reyes,23 the Court declared that a corporation's right to
use its corporate and trade name is a property right, a right in rem, which it may assert and protect
against the world in the same manner as it may protect its tangible property, real or personal, against
trespass or conversion.24 It is regarded, to a certain extent, as a property right and one which cannot be
impaired or defeated by subsequent appropriation by another corporation in the same field.25 Furthermore,
in Philips Export B.V. v. Court of Appeals,26 we held:
A name is peculiarly important as necessary to the very existence of a corporation x x x. Its name is one of
its attributes, an element of its existence, and essential to its identity x x x. The general rule as to
corporations is that each corporation must have a name by which it is to sue and be sued and do all legal
acts. The name of a corporation in this respect designates the corporation in the same manner as the name
of an individual designates the person x x x; and the right to use its corporate name is as much a part of
the corporate franchise as any other privilege granted x x x.
A corporation acquires its name by choice and need not select a name identical with or similar to one
already appropriated by a senior corporation while an individual's name is thrust upon him x x x. A
corporation can no more use a corporate name in violation of the rights of others than an individual can use
his nan1e legally acquired so as to mislead the public and injure another x x x.27
Recognizing the intrinsic importance of corporate names, our Corporation Code established a restrictive
rule insofar as corporate names are concerned.28 Thus, Section 18 thereof provides:
Sec. 18. Corporate name. - No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently deceptive, confusing or contrary
to existing laws. When a change in the corporate name is approved, the Commission shall issue an
amended certificate of incorporation under the amended name.
The policy underlying the prohibition in Section 18 against the registration of a corporate name which is
"identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently
deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public
which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties,
and the reduction of difficulties of administration and supervision over corporations.29
Indeed, parties organizing a corporation must choose a name at their peril; and the use of a name similar
to one adopted by another corporation, whether a business or a non-profit organization, if misleading or
likely to injure in the exercise of its corporate functions, regardless of intent, may be prevented by the
corporation having a prior right, by a suit for injunction against the new corporation to prevent the use of
the name.30
In Philips Export B.V. v. Court of Appeals,31 the Court held that to fall within the prohibition of Section 18,
two requisites must be proven, to wit: (1) that the complainant corporation acquired a prior right over
the use of such corporate name; and (2) the proposed name is either: (a) identical, or (b) deceptively
or confusingly similar to that of any existing corporation or to any other name already protected by
law; or (c) patently deceptive, confusing or contrary to existing law.32
With respect to the first requisite, the Court has held that the right to the exclusive use of a corporate
name with freedom from infringement by similarity is determined by priority of adoption.33
In this case, respondents' corporate names were registered on the following dates: (1) De La Salle
Brothers, Inc. on October 9, 1961 under SEC Registration No. 19569; (2) De La Salle University, Inc.
on December 19, 1975 under SEC Registration No. 65138; (3) La Salle Academy, Inc. on January 26,
1960 under SEC Registration No. 16293; (4) De La SalleSantiago Zobel School, Inc. on October 7,
1976 under SEC Registration No. 69997; and (5) De La Salle Canlubang, Inc. on August 5, 1998 under
SEC Registration No. Al998-01021.34
On the other hand, petitioner was issued a Certificate of Registration only on July 5, 2007 under
Company Registration No. CN200710647.35 It being clear that respondents are the prior registrants,
they certainly have acquired the right to use the words "De La Salle" or "La Salle" as part of their
corporate names.
The second requisite is also satisfied since there is a confusing similarity between petitioner's and
respondents' corporate names. While these corporate names are not identical, it is evident that the
phrase "De La Salle" is the dominant phrase used.
Petitioner asserts that it has the right to use the phrase "De La Salle" in its corporate name as
respondents did not obtain the right to its exclusive use, nor did the words acquire secondary meaning.
It endeavoured to demonstrate that no confusion will arise from its use of the said phrase by stating
that its complete name, "De La Salle Montessori International of Malolos, Inc.," contains four other
distinctive words that are not found in respondents' corporate names. Moreover, it obtained the words
"De La Salle" from the French word meaning "classroom," while respondents obtained it from the
French priest named Saint Jean Baptiste de La Salle. Petitioner also compared its logo to that of
respondent De La Salle University and argued that they are different. Further, petitioner argued that it
does not charge as much fees as respondents, that its clients knew that it is not part of respondents'
schools, and that it never misrepresented nor claimed to be an affiliate of respondents. Additionally, it
has gained goodwill and a name worthy of trust in its own right.36
We are not persuaded.
In determining the existence of confusing similarity in corporate names, the test is whether the
similarity is such as to mislead a person using ordinary care and discrimination. In so doing, the Court
must look to the record as well as the names themselves.37
Petitioner's assertion that the words "Montessori International of Malolos, Inc." are four distinctive
words that are not found in respondents' corporate names so that their corporate name is not identical,
confusingly similar, patently deceptive or contrary to existing laws,38 does not avail. As correctly held
by the SEC OGC, all these words, when used with the name "De La Salle," can reasonably mislead a
person using ordinary care and discretion into thinking that petitioner is an affiliate or a branch of, or is
likewise founded by, any or all of the respondents, thereby causing confusion.39
Petitioner's argument that it obtained the words "De La Salle" from the French word meaning
"classroom," while respondents obtained it from the French priest named Saint Jean Baptiste de La
Salle,40 similarly does not hold water. We quote with approval the ruling of the SEC En Banc on this
matter. Thus:
Generic terms are those which constitute "the common descriptive name of an article or substance," or
comprise the "genus of which the particular product is a species," or are "commonly used as the name
or description of a kind of goods," or "characters," or "refer to the basic nature of the wares or services
provided rather than to the more idiosyncratic characteristics of a particular product," and are not
legally protectable. It has been held that if a mark is so commonplace that it cannot be readily
distinguished from others, then it is apparent that it cannot identify a particular business; and he who
first adopted it cannot be injured by any subsequent appropriation or imitation by others, and the
public will not be deceived.
Contrary to [petitioner's] claim, the word salle only means "room" in French. The word la, on the other
hand, is a definite article ("the") used to modify salle. Thus, since salle is nothing more than a room,
[respondents'] use of the term is actually suggestive.
A suggestive mark is therefore a word, picture, or other symbol that suggests, but does not directly
describe something about the goods or services in connection with which it is used as a mark and gives
a hint as to the quality or nature of the product. Suggestive trademarks therefore can be distinctive
and are registrable.
The appropriation of the term "la salle" to associate the words with the lofty ideals of education and
learning is in fact suggestive because roughly translated, the words only mean "the room." Thus, the
room could be anything - a room in a house, a room in a building, or a room in an office.
xxx
In fact, the appropriation by [respondents] is fanciful, whimsical and arbitrary because there is no
inherent connection between the words la salle and education, and it is through [respondents']
painstaking efforts that the term has become associated with one of the top educational institutions in
the country. Even assuming arguendo that la salle means "classroom" in French, imagination is
required in order to associate the term with an educational institution and its particular brand of
service.41
We affirm that the phrase "De La Salle" is not merely a generic term. Respondents' use of the phrase
being suggestive and may properly be regarded as fanciful, arbitrary and whimsical, it is entitled to
legal protection.42 Petitioner's use of the phrase "De La Salle" in its corporate name is patently similar
to that of respondents that even with reasonable care and observation, confusion might arise. The
Court notes not only the similarity in the parties' names, but also the business they are engaged in.
They are all private educational institutions offering pre-elementary, elementary and secondary
courses.43 As aptly observed by the SEC En Banc, petitioner's name gives the impression that it is a
branch or affiliate of respondents.44 It is settled that proof of actual confusion need not be shown. It
suffices that confusion is probable or likely to occur.45
Finally, the Court's ruling in Lyceum of the Philippines46 does not apply.
In that case, the Lyceum of the Philippines, Inc., an educational institution registered with the SEC,
commenced proceedings before the SEC to compel therein private respondents who were all
educational institutions, to delete the word "Lyceum" from their corporate names and permanently
enjoin them from using the word as part of their respective names.
The Court there held that the word "Lyceum" today generally refers to a school or institution of
learning. It is as generic in character as the word "university." Since "Lyceum" denotes a school or
institution of learning, it is not unnatural to use this word to designate an entity which is organized and
operating as an educational institution. Moreover, the Lyceum of the Philippines, Inc.'s use of the word
"Lyceum" for a long period of time did not amount to mean that the word had acquired secondary
meaning in its favor because it failed to prove that it had been using the word all by itself to the
exclusion of others. More so, there was no evidence presented to prove that the word has been so
identified with the Lyceum of the Philippines, Inc. as an educational institution that confusion will surely
arise if the same word were to be used by other educational institutions.47
Here, the phrase "De La Salle" is not generic in relation to respondents. It is not descriptive of
respondent's business as institutes of learning, unlike the meaning ascribed to "Lyceum." Moreover,
respondent De La Salle Brothers, Inc. was registered in 1961 and the De La Salle group had been using
the name decades before petitioner's corporate registration. In contrast, there was no evidence of the
Lyceum of the Philippines, Inc.'s exclusive use of the word "Lyceum," as in fact another educational
institution had used the word 17 years before the former registered its corporate name with the SEC.
Also, at least nine other educational institutions included the word in their corporate names. There is
thus no similarity between the Lyceum of the Philippines case and this case that would call for a similar
ruling.
The enforcement of the protection accorded by Section 18 of the Corporation Code to corporate names
is lodged exclusively in the SEC. By express mandate, the SEC has absolute jurisdiction, supervision
and control over all corporations. It is the SEC's duty to prevent confusion in the use of corporate
names not only for the protection of the corporations involved, but more so for the protection of the
public. It has authority to de-register at all times, and under all circumstances, corporate names which
in its estimation are likely to generate confusion.48
Clearly, the only determination relevant to this case is that one made by the SEC in the exercise of its
express mandate under the law.49
Time and again, we have held that findings of fact of quasi-judicial agencies, like the SEC, are
generally accorded respect and even finality by this Court, if supported by substantial evidence, in
recognition of their expertise on the specific matters under their consideration, more so if the same has
been upheld by the appellate court, as in this case.50
WHEREFORE, the Petition is DENIED. The assailed Decision of the CA dated September 27, 2012
is AFFIRMED.
SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Del Castillo, and Tijam, JJ., concur.
SECOND DIVISION
G.R. No. 224307, August 06, 2018
THE MISSIONARY SISTERS OF OUR LADY OF FATIMA (PEACH SISTERS OF LAGUNA), REPRESENTED
BY REV. MOTHER MA. CONCEPCION R. REALON, ET AL., Petitioners, v. AMANDO V. ALZONA, ET
AL., Respondents.
DECISION
REYES, JR., J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and
set aside the Decision2 dated January 7, 2016 of the Court of Appeals (CA) in CA-G.R. CV No. 101944, and its
Resolution3 dated April 19, 2016, denying the motion for reconsideration thereof. The assailed decision partly
granted the respondents' appeal and set aside the Decision4 dated August 14, 2013 of the Regional Trial Court
(RTC) of Calamba City, Branch 92 in Civil Case No. 3250-02-C.
The Antecedent Facts
The Missionary Sisters of Our Lady of Fatima (petitioner), otherwise known as the Peach Sisters of Laguna, is a
religious and charitable group established under the patronage of the Roman Catholic Bishop of San Pablo on
May 30, 1989. Its primary mission is to take care of the abandoned and neglected elderly persons. The petitioner
came into being as a corporation by virtue of a Certificate issued by the Securities and Exchange Commission
(SEC) on August 31, 2001.5 Mother Ma. Concepcion R. Realon (Mother Concepcion) is the petitioner's Superior
General.
The respondents, on the other hand, are the legal heirs of the late Purificacion Y. Alzona (Purificacion).
The facts giving rise to the instant controversy follow:
Purificacion, a spinster, is the registered owner of parcels of land covered by Transfer Certificate of Title (TCT)
Nos. T-57820* and T-162375; and a co-owner of another property covered by TCT No. T-162380, all of which are
located in Calamba City, Laguna.6
In 1996, Purificacion, impelled by her unmaterialized desire to be nun, decided to devote the rest of her life in
helping others. In the same year, she then became a benefactor of the petitioner by giving support to the
community and its works.7
In 1997, during a doctor's appointment, Purificacion then accompanied by Mother Concepcion, discovered that
she has been suffering from lung cancer. Considering the restrictions in her movement, Purificacion requested
Mother Concepcion to take care of her in her house, to which the latter agreed.8
In October 1999, Purificacion called Mother Concepcion and handed her a handwritten letter dated October 1999.
Therein, Purificacion stated that she is donating her house and lot at F. Mercado Street and Riceland at Banlic,
both at Calamba, Laguna, to the petitioner through Mother Concepcion. On the same occasion, Purificacion
introduced Mother Concepcion to her nephew, Francisco Del Mundo (Francisco), and niece, Ma. Lourdes Alzona
Aguto-Africa (Lourdes). Purificacion, instructed Francisco to give a share of the harvest to Mother Concepcion,
and informed Lourdes that she had given her house to Mother Concepcion.9
Sometime in August 2001, at the request of Purificacion, Mother Concepcion went to see Atty. Nonato Arcillas
(Atty. Arcillas) in Los Baños, Laguna. During their meeting, Atty. Arcillas asked Mother Concepcion whether their
group is registered with the SEC, to which the latter replied in the negative. Acting on the advice given by Atty.
Arcillas, Mother Concepcion went to SEC and filed the corresponding registration application on August 28,
2001.10
On August 29, 2001, Purificacion executed a Deed of Donation Inter Vivos (Deed) in favor of the petitioner,
conveying her properties covered by TCT Nos. T-67820 and T-162375, and her undivided share in the property
covered by TCT No. T-162380. The Deed was notarized by Atty. Arcillas and witnessed by Purificacion's nephews
Francisco and Diosdado Alzona, and grandnephew, Atty. Fernando M. Alonzo. The donation was accepted on even
date by Mother Concepcion for and in behalf of the petitioner.11
Thereafter, Mother Concepcion filed an application before the Bureau of Internal Revenue (BIR) that the
petitioner be exempted from donor's tax as a religious organization. The application was granted by the BIR
through a letter dated January 14, 2002 of Acting Assistant Commissioner, Legal Service, Milagros Regalado.12
Subsequently, the Deed, together with the owner's duplicate copies of TCT Nos. T-57820, T-162375, and T-
162380, and the exemption letter from the BIR was presented for registration. The Register of Deeds, however,
denied the registration on account of the Affidavit of Adverse Claim dated September 26, 2001 filed by the
brother of Purificacion, respondent Amando Y. Alzona (Amando).13
On October 30, 2001, Purificacion died without any issue, and survived only by her brother of full blood, Amando,
who nonetheless died during the pendency of this case and is now represented and substituted by his legal heirs,
joined as herein respondents.14
On April 9, 2002, Amando filed a Complaint before the RTC, seeking to annul the Deed executed between
Purificacion and the petitioner, on the ground that at the time the donation was made, the latter was not
registered with the SEC and therefore has no juridical personality and cannot legally accept the donation.15
After trial, on August 14, 2013, the RTC rendered its Decision16 finding no merit in the complaint, thus ruling:
WHEREFORE, the instant case is hereby DISMISSED with costs against the [respondents]. The Compulsory
counterclaim of the [petitioner] is likewise dismissed for lack of evidence.
SO ORDERED.17
In its decision, the RTC held that all the essential elements of a donation are present. The RTC set aside the
allegation by the respondents relating to the incapacity of the parties to enter into a donation.18
In the case of Purificacion, the RTC held that apart from the self-serving allegations by the respondents, the
records are bereft of evidence to prove that she did not possess the proper mental faculty in making the
donation; as such the presumption that every person is of sound mind stands.19
On the capacity of the donee, the RTC held that at the time of the execution of the Deed, the petitioner was a de
facto corporation and as such has the personality to be a beneficiary and has the power to acquire and possess
property. Further then, the petitioner's incapacity cannot be questioned or assailed in the instant case as it
constitutes a collateral attack which is prohibited by the Corporation Code of the Philippines.20 In this regard, the
RTC found that the recognition by the petitioner of Mother Concepcion's authority is sufficient to vest the latter of
the capacity to accept the donation.21
Acting on the appeal filed by the respondents, the CA rendered the herein assailed Decision22 on January 7, 2016,
the dispositive portion of which reads:
WHEREFORE, the appeal is PARTLY GRANTED. The assailed August 14, 2013 Decision of the RTC, Branch 92,
Calamba City in Civil Case No. 3250-02 is SET ASIDE by declaring as VOID the deed of Donation dated August
14, 2013. [The respondents'] prayer for the award of moral and exemplary damages as well as attorney's fees is
nevertheless DENIED.
SO ORDERED.23
In so ruling, the CA, citing the case of Seventh Day Adventist Conference Church of Southern Phils., Inc. v.
Northeastern Mindanao Mission of Seventh Day Adventist, Inc.,24 held that the petitioner cannot be considered as
a de facto corporation considering that at the time of the donation, there was no bona fide attempt on its part to
incorporate.25 As an unregistered corporation, the CA concluded that the petitioner cannot exercise the powers,
rights, and privileges expressly granted by the Corporation Code. Ultimately, bereft of juridical personality, the
CA ruled that the petitioner cannot enter into a contract of Donation with Purificacion.26
Finally, the CA denied the respondents' claim for actual damages and attorney's fees for failure to substantiate
the same.27
The petitioner sought a reconsideration of the Decision dated January 7, 2016, but the CA denied it in its
Resolution28 dated April 19, 2016.
In the instant petition, the petitioner submits the following arguments in support of its position:
a. The Donation Inter Vivos is valid and binding against the parties therein [Purificacion] and the [petitioner]
and their respective successors in interest:
1.) The [petitioner] has the requisite legal personality to accept donations as a religious institution under
the Roman Catholic Bishop of San Pablo authorized to receive donations;
2.) The [petitioner] has the requisite legal capacity to accept the donation as it may be considered a de
facto corporation.
3.) Regardless of the absence of the Certificate of Registration of [petitioner] at the time of the execution
of the Deed of Donation, the same is still valid and binding having been accepted by a representative of
the [petitioner] while the latter was still waiting for the issuance of the Certificate of Registration and
which acceptance of the donation was duly ratified by the corporation.
4.) The intestate estate of Purificacion is estopped from questioning the legal personality of [the
petitioner].
b.
c. The Respondents lack the requisite legal capacity to question the legality of the deed of donation.29
In sum, the issue to be resolved by this Court in the instant case is whether or not the Deed executed by
Purificacion in favor of the petitioner is valid and binding. In relation to this, the Court is called upon to determine
the legal capacity of the petitioner, as donee, to accept the donation, and the authority Mother Concepcion to act
on behalf of the petitioner in accepting the donation.
Ruling of the Court
The petition is meritorious.
The petitioner argues that it has the requisite legal personality to accept the donation as a religious institution
organized under the Roman Catholic Bishop of San Pablo, a corporation sole.30
Regardless, the petitioner contends that it is a de facto corporation and therefore possessed of the requisite
personality to enter into a contract of donation.
Assuming further that it cannot be considered as a de facto corporation, the petitioner submits that the
acceptance by Mother Concepcion while the religious organization is still in the process of incorporation is valid as
it then takes the form of a pre-incorporation contract governed by the rules on agency. The petitioner argues
that their subsequent incorporation and acceptance perfected the subject contract of donation.31
Ultimately, the petitioner argues that the intestate estate of Purificacion is estopped from questioning its legal
personality considering the record is replete of evidence to prove that Purificacion at the time of the donation is
fully aware of its status and yet was still resolved into giving her property.32
In response, the respondents submit that juridical personality to enter into a contract of donation is vested only
upon the issuance of a Certificate of Incorporation from SEC.33 Further, the respondents posit that the petitioner
cannot even be considered as a de facto corporation considering that for more than 20 years, there was never
any attempt on its part to incorporate, which decision came only after Atty. Arcillas, suggestion.34
In order that a donation of an immovable property be valid, the following elements must be present: (a) the
essential reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; (c) the intent
to do an act of liberality or animus donandi; (d) the donation must be contained in a public document; and e)
that the acceptance thereof be made in the same deed or in a separate public instrument; if acceptance is made
in a separate instrument, the donor must be notified thereof in an authentic form, to be noted in both
instruments.35
There is no question that the true intent of Purificacion, the donor and the owner of the properties in question,
was to give, out of liberality the subject house and lot, which she owned, to the petitioner. This act, was then
contained in a public document, the deed having been acknowledged before Atty. Arcillas, a Notary Public.36 The
acceptance of the donation is made on the same date that the donation was made and contained in the same
instrument as manifested by Mother Concepcion's signature.37 In fine, the remaining issue to be resolved is the
capacity of the petitioner as donee to accept the donation, and the authority of Mother Concepcion to act on its
behalf for this purpose.
Under Article 737 of the Civil Code, "[t]he donor's capacity shall be determined as of the time of the making of
the donation." By analogy, the legal capacity or the personality of the donee, or the authority of the latter's
representative, in certain cases, is determined at the time of acceptance of the donation.
Article 738, in relation to Article 745, of the Civil Code provides that all those who are not specifically disqualified
by law may accept donations either personally or through an authorized representative with a special power of
attorney for the purpose or with a general and sufficient power.
The Court finds that for the purpose of accepting the donation, the petitioner is deemed vested with personality
to accept, and Mother Concepcion is clothed with authority to act on the latter's behalf.
At the outset, it must be stated that as correctly pointed out by the CA, the RTC erred in holding that the
petitioner is a de facto corporation.
Jurisprudence settled that "[t]he filing of articles of incorporation and the issuance of the certificate of
incorporation are essential for the existence of a de facto corporation."38 In fine, it is the act of registration with
SEC through the issuance of a certificate of incorporation that marks the beginning of an entity's corporate
existence.39
Petitioner filed its Articles of Incorporation and by-laws on August 28, 2001. However, the SEC issued the
corresponding Certificate of Incorporation only on August 31, 2001, two (2) days after Purificacion executed a
Deed of Donation on August 29, 2001. Clearly, at the time the donation was made, the Petitioner cannot be
considered a corporation de facto. 40
Rather, a review of the attendant circumstances reveals that it calls for the application of the doctrine of
corporation by estoppel as provided for under Section 21 of the Corporation Code, viz.:
Sec. 21. Corporation by estoppel. - All persons who assume to act as a corporation knowing it to be without
authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a
result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered
by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack
of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot resist performance
thereof on the ground that there was in fact no corporation. (Emphasis Ours)
The doctrine of corporation by estoppel is founded on principles of equity and is designed to prevent injustice and
unfairness. It applies when a non-existent corporation enters into contracts or dealings with third persons.41 In
which case, the person who has contracted or otherwise dealt with the non-existent corporation is estopped to
deny the latter's legal existence in any action leading out of or involving such contract or dealing. While the
doctrine is generally applied to protect the sanctity of dealings with the public,42 nothing prevents its application
in the reverse, in fact the very wording of the law which sets forth the doctrine of corporation by estoppel
permits such interpretation. Such that a person who has assumed an obligation in favor of a non-existent
corporation, having transacted with the latter as if it was duly incorporated, is prevented from denying the
existence of the latter to avoid the enforcement of the contract.
Jurisprudence dictates that the doctrine of corporation by estoppel applies for as long as there is no fraud and
when the existence of the association is attacked for causes attendant at the time the contract or dealing sought
to be enforced was entered into, and not thereafter.43
In this controversy, Purificacion dealt with the petitioner as if it were a corporation. This is evident from the fact
that Purificacion executed two (2) documents conveying her properties in favor of the petitioner – first, on
October 11, 1999 via handwritten letter, and second, on August 29, 2001 through a Deed; the latter having been
executed the day after the petitioner filed its application for registration with the SEC.44
The doctrine of corporation by estoppel rests on the idea that if the Court were to disregard the existence of an
entity which entered into a transaction with a third party, unjust enrichment would result as some form of benefit
have already accrued on the part of one of the parties. Thus, in that instance, the Court affords upon the
unorganized entity corporate fiction and juridical personality for the sole purpose of upholding the contract or
transaction.
In this case, while the underlying contract which is sought to be enforced is that of a donation, and thus rooted
on liberality, it cannot be said that Purificacion, as the donor failed to acquire any benefit therefrom so as to
prevent the application of the doctrine of corporation by estoppel.45 To recall, the subject properties were given
by Purificacion, as a token of appreciation for the services rendered to her during her illness.46 In fine, the subject
deed partakes of the nature of a remuneratory or compensatory donation, having been made "for the purpose of
rewarding the donee for past services, which services do not amount to a demandable debt."47
As elucidated by the Court in Pirovano, et al. v. De La Rama Steamship Co.:48
In donations made to a person for services rendered to the donor, the donor's will is moved by acts which
directly benefit him. The motivating cause is gratitude, acknowledgment of a favor, a desire to compensate. A
donation made to one who saved the donor's life, or a lawyer who renounced his fees for services rendered to
the donor, would fall under this class of donations.49
Therefore, under the premises, past services constitutes consideration, which in tum can be regarded as "benefit"
on the part of the donor, consequently, there exists no obstacle to the application of the doctrine of corporation
by estoppel; although strictly speaking, the petitioner did not perform these services on the expectation of
something in return.
Precisely, the existence of the petitioner as a corporate entity is upheld in this case for the purpose of validating
the Deed to ensure that the primary objective for which the donation was intended is achieved, that is, to convey
the property for the purpose of aiding the petitioner in the pursuit of its charitable objectives.
Further, apart from the foregoing, the subsequent act by Purificacion of re-conveying the property in favor of the
petitioner is a ratification by conduct of the otherwise defective donation.50
Express or implied ratification is recognized by law as a means to validate a defective contract.51 Ratification

cleanses or purges the contract from its defects from constitution or establishment, retroactive to the day of its
creation. By ratification, the infirmity of the act is obliterated thereby making it perfectly valid and enforceable.52
The principle and essence of implied ratification require that the principal has full knowledge at the time of
ratification of all the material facts and circumstances relating to the act sought to be ratified or validated.53 Also,
it is important that the act constituting the ratification is unequivocal in that it is performed without the slightest
hint of objection or protest from the donor or the donee, thus producing the inevitable conclusion that the
donation and its acceptance were in fact confirmed and ratified by the donor and the donee.54
In this controversy, while the initial conveyance is defective, the genuine intent of Purificacion to donate the
subject properties in favor of the petitioner is indubitable. Also, while the petitioner is yet to be incorporated, it
cannot be said that the initial conveyance was tainted with fraud or misrepresentation. Contrarily, Purificacion
acted with full knowledge of circumstances of the Petitioner. This is evident from Purificacion's act of referring
Mother Concepcion to Atty. Arcillas, who, in turn, advised the petitioner to apply for registration. Further, with
the execution of two (2) documents of conveyance in favor of the petitioner, it is clear that what Purificacion
intended was for the sisters comprising the petitioner to have ownership of her properties to aid them in the
pursuit of their charitable activities, as a token of appreciation for the services they rendered to her during her
illness.55 To put it differently, the reference to the petitioner was merely a descriptive term used to refer to the
sisters comprising the congregation collectively. Accordingly, the acceptance of Mother Concepcion for the sisters
comprising the congregation is sufficient to perfect the donation and transfer title to the property to the
petitioner. Ultimately, the subsequent incorporation of the petitioner and its affirmation of Mother Concepcion's
authority to accept on its behalf cured whatever defect that may have attended the acceptance of the donation.
The Deed sought to be enforced having been validly entered into by Purificacion, the respondents' predecessor-
in-interest, binds the respondents who succeed the latter as heirs.56 Simply, as they claim interest in their
capacity as Purificacion's heirs, the respondents are considered as "privies" to the subject Deed; or are "those
between whom an action is binding although they are not literally parties to the said action."57 As discussed
in Constantino, et al. v. Heirs of Pedro Constantino, Jr.:58
[p]rivity in estate denotes the privity between assignor and assignee, donor and donee, grantor and grantee,
joint tenant for life and remainderman or reversioner and their respective assignees, vendor by deed of warranty
and a remote vendee or assignee. A privy in estate is one, it has been said, who derives his title to the property
in question by purchase; one who takes by conveyance. In fine, respondents, as successors-in-interest, derive
their right from and are in the same position as their predecessor in whose shoes they now stand.59 (Citation
omitted)
Anent the authority of Mother Concepcion to act as representative for and in behalf of the petitioner, the Court
similarly upholds the same. Foremost, the authority of Mother Concepcion was never questioned by the
petitioner. In fact, the latter affirms and supports the authority of Mother Concepcion to accept the donation on
their behalf; as she is, after all the congregation's Superior General.60 Furthermore, the petitioner's avowal of
Mother Concepcion's authority after their SEC registration is a ratification of the latter's authority to accept the
subject donation as the petitioner's representative.61
In closing, it must be emphasized that the Court is both of law and of justice. Thus, the Court's mission and
purpose is to apply the law with justice.62
Donation is an expression of our social conscience, an act rooted purely on the goodness of one's heart and
intent to contribute.
Purificacion, the donor is worthy of praise for her works of charity. Likewise, the petitioner is worthy of
admiration for with or without the promise of reward or consideration, the Court is certain that it is impelled by
sincere desire to help the petitioner in overcoming her illness.
It is unfortunate that the will of a person moved by the desire to reciprocate the goodness shown to her during
the lowest and culminating points of her life is questioned and herein sought to be nullified on strict legality,
when the intent of the donor to give is beyond question.
The promotion of charitable works is a laudable objective. While not mentioned in the Constitution, the Court
recognizes benevolent giving as an important social fabric that eliminates inequality. As such, charitable giving
must be encouraged through support from society and the Court.
WHEREFORE, in consideration of the foregoing disquisitions, the instant petition for review
on certiorari is GRANTED. Accordingly, the Decision dated January 7, 2016 and Resolution dated April 19, 2016
of the Court of Appeals in CA-G.R. CV No. 101944, are hereby REVERSED and SET ASIDE.
SO ORDERED.
Carpio, (Chairperson), Peralta, Perlas-Bernabe, and Caguioa, JJ., concur.

Corpo - Title Ii - Incorporation and Organization of Private Corporations

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G.R. No.

195580 April 21, 2014

This case not moot and academic

1.) There is a grave violation of the Constitution;

4.) The case is capable of repetition yet evading review.34

Conversion of MPSA applications to FTAA applications

SECTION 3. Definitions. - As used in this Act:

Art. XII, Sec. 2 of the Constitution provides:

MR. VILLEGAS: Yes. But we will be open to improvement of the phraseology.

Mr. BENNAGEN: Yes.

Thank you, Mr. Vice-President.

MR. VILLEGAS: That is right.

MR. VILLEGAS: That is right.

MR. NOLLEDO: Thank you.

MR. VILLEGAS: Yes, that is the understanding of the Committee.

MR. NOLLEDO: Therefore, we need additional Filipino capital?

MR. VILLEGAS: Yes.42 (emphasis supplied)

Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:

McArthur Mining, Inc.

Name Nationalit Number of Amount Amount Paid

Madridejos Mining Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00

MBMI Resources, Canadian 3,998 PhP 3,998,000.0 PhP 1,878,174.60

Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00

Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00

Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60

Madridejos Mining Corporation

Name Nationality Number of Shares Amount Subscribed Amount Paid

Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0

MBMI Resources, Canadian 3,331 PhP 3,331,000.00 PhP 2,803,900.00

Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00

Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00

Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00

Name Nationality Number of Amount Amount Paid

Sara Marie Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00

MBMI Canadian 3,998 PhP 3,998,000.00 PhP 1,878,174.60

Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00

Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00

Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60

Sara Marie Mining, Inc.

Name Nationality Number of Amount Amount Paid

Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0

MBMI Resources, Canadian 3,331 PhP 3,331,000.00 PhP 2,794,000.00

Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00

Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00

Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00

Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Narra Nickel Mining and Development Corporation

Name Nationality Number of Amount Amount Paid

Patricia Louise Filipino 5,997 PhP 5,997,000.00 PhP 1,677,000.00

MBMI Canadian 3,998 PhP 3,996,000.00 PhP 1,116,000.00

Higinio C. Filipino 1 PhP 1,000.00 PhP 1,000.00

Henry E. Filipino 1 PhP 1,000.00 PhP 1,000.00