Angeles v. Gaitan, G.R. No. 165276, 25 November 2009. half-sister.
He disclosed that he brought the girl to the residence of
Topic:
Recitation Version:
Petitioner Judge Angeles, the foster mother of Maria Mercedes Vistan, supported
Maria and her half-brother Michael Vistan financially and emotionally. However,
Petitioner and Michael had a falling out which led to a cut in the assistance. Michael
induced Maria to leave and took her away. Petitioner failed to find her, so she filed
a complaint against Michael Vistan for Kidnapping, Child Abuse (5), and Obstruction
of Justice (4). The petitioner filed a petition for review before the Office of the
President but the petition and motion for reconsideration was denied based on
Memorandum Circular No. 58 which bars an appeal or a petition for review
of decisions/orders/resolutions of the Secretary of Justice except those involving
offenses punishable by reclusion perpetua or death. Petitioner contends that the
Office of the President erred in relying on Memorandum Circular No. 58,
series of 1993 because it diminishes the power of control of the President
and bestows upon the Secretary of Justice, a subordinate officer, almost
unfettered power. The Court ruled that the President's act of delegating
authority to the Secretary of Justice by virtue of said Memorandum Circular is
within the purview of the doctrine of qualified political agency. The
memorandum Circular No. 58 was promulgated by the Office of the President and it
is settled that the acts of the secretaries of such departments, performed and
promulgated in the regular course of business are, unless disapproved or reprobated
by the Chief Executive, presumptively the acts of the Chief Executive. Memorandum
Circular No. 58 has not been reprobated by the President; therefore, it goes without
saying that the said Memorandum Circular has the approval of the President.
Furthermore, this does not fall under the cases which cannot be delegated.
Facts:
1. Petitioner Judge Adoracion G. Angeles was the foster mother of her 14
year-old grandniece, Maria Mercedes Vistan, from the tender age of four.
Petitioner provided the child financially and emotionally.
2. This extended to her her half-brother respondent Michael Vistan, a former
drug- addict, and the latter's family who were regular beneficiaries of the
undersigned's generosity.
3. In the evening of 11 April 1999, Michael Vistan had a falling out with
petitioner for his failure to do a very important errand for which he was
severely reprimanded over the phone. He was that no assistance of any
kind would be extended to him anymore.
4. As a result, He induced Maria to leave petitioner's custody and took the
girl away while petitioner was at her office.
5. In the evening of that day, petitioner sought Michael Vistan in his
residence in Sta. Cruz, Guiguinto, Bulacan to ask the whereabouts of his
her maternal relatives in Sta. Monica, Hagonoy, Bulacan.
6. Petitioner, together with the Criminal Investigation and Detective Group Field
Office in Malolos, Bulacan, failed to locate the girl. Instead, they were
given the run-around as the spouses Tolentino and spouses Nazareno
misled them with the false information that Maria Mercedes was already
brought by their brother Carmelito Guevarra and the latter's wife Camilia to
Casiguran, Quezon Province.
7. On 13 April 1999, petitioner filed a complaint for Kidnapping under
Article 271 of the Revised Penal Code (Inducing a Minor to Abandon
His Home) against Michael Vistan, the Tolentino spouses, the Nazareno
spouses and Guevarra spouses.
8. Michael Vistan went into hiding and brought the girl to ABS-CBN where
he made her recite a concocted tale of child abuse against herein
petitioner hoping that this would compel the latter to withdraw the
kidnapping charge which she earlier filed.
9. In the early morning of 16 April 1999, Michael Vistan brought Maria
Mercedes to the DSWD after he felt himself cornered by the police dragnet
laid for him.
10. Through his overwhelming desire to retaliate and get himself off the
hook, Michael Vistan had deliberately caused undue physical, emotional
and psychological sufferings to the child
11. Petitioner filed a complaint against Michael Vistan for five counts of
Violation of Section 10 (a), Article VI of RA 7610, otherwise known as the
Child Abuse Act, and for four counts of Violation of Sec. 1 (e) of PD 1829.
12. Prosecutor. Investigating Prosecutor Benjamin R. Caraig recommended
upheld the charge of Child Abuse against Michael Vistan. But, the charge
of Violation of PD 1829 was dismissed.
13. Provincial Prosecutor Amando C. Vicente denied the recommendation
and approved the recommendation for the dismissal of the charge for
Violation of PD 1829.
a. Petitioner filed a Motion for Partial Reconsideration but was
denied.
14. DOJ. Petitioner then filed a Petition for Review before the Department
of Justice. Undersecretary Manuel A.J. Teehankee denied the petition for
review.
a. The Motion for Reconsideration was likewise denied by then
DOJ Secretary Hernando B. Perez.
15. Office of the President. On 26 November 2001, the undersigned filed
a Petition for Review before the Office of President.
a. The petition was dismissed and the motion for
reconsideration was denied before said forum anchored on
Memorandum Circular No. 58 which bars an appeal or a
petition for review of decisions/orders/resolutions of the
Secretary of Justice except those involving offenses punishable
by reclusion perpetua or death
16. CA. Petitioner filed a petition for review before the CA assailing the Order
of the Office of President. Petitioner argued that the Office of the
 President erred in relying on Memorandum Circular No. 58, series of
1993.
a. Petitioner assailed the constitutionality of the memorandum
circular, specifically arguing that Memorandum Circular No. 58
is an invalid regulation because it diminishes the power of
control of the President and bestows upon the Secretary of
Justice, a subordinate officer, almost unfettered power
b. CA dismissed the petition and affirmed the position of the
Solicitor General (OSG) to apply the doctrine of qualified political
agency
Issue: Whether the Court erred in upholding the reliance of the Office of the President
in the provisions of Memorandum Circular No. 58.
Ruling: No
Rationale:
Exception is not applicable
- There are cases where the Chief Executive is required by the Constitution
or law to act in person or the exigencies of the situation demand that he act
personally.
- In the case at bar, the power of the President to review the Decision of the
Secretary of Justice dealing with the preliminary investigation of cases
cannot be considered as falling within the same exceptional class
which cannot be delegated.
- Besides, the President has not fully abdicated his power of control as
Memorandum Circular No. 58 allows an appeal if the imposable penalty is
reclusion perpetua or higher.
- It would be unreasonable to impose upon the President the task of
reviewing all preliminary investigations decided by the Secretary of Justice.
To do so will unduly hamper the other important duties of the President by
having to scrutinize each and every decision of the Secretary of Justice
notwithstanding the latter's expertise in said matter.

The Doctrine of Qualified Political Agency is applicable

Others

- Petitioner's argument is purely speculative

- The President's act of delegating authority to the Secretary of Justice
- The failure on the part of the arresting officer/s to arrest the person of the
by virtue of said Memorandum Circular is within the purview of the
accused makes the latter a fugitive from justice and is not equivalent to
doctrine of qualified political agency, long been established in our
a commission of another offense of obstruction of justice.
jurisdiction.
- Penal statutes are to be liberally construed in favor of the accused.
o Under this doctrine, which primarily recognizes the
- the provincial prosecutor and the Secretary of Justice did not act with grave
establishment of a single executive, the heads of the various
abuse of discretion, as their conclusion of lack of probable cause was based
executive departments are assistants and agents of the Chief
on the affidavit of the alleged victim herself.
Executive and unless disapproved or reprobated by the
- While petitioner would argue that the victim was "brainwashed" by
Chief Executive, the acts of the secretaries of such
respondent into executing the affidavit, this Court finds no conclusive proof
departments performed and promulgated in the regular course
thereof.
of business, are presumptively the acts of the Chief
Executive.
o Memorandum Circular No. 58 was promulgated by the Office of the
President and it is settled that the acts of the secretaries of such
departments, performed and promulgated in the regular course of
business are, unless disapproved or reprobated by the Chief
Executive, presumptively the acts of the Chief Executive.
Memorandum Circular No. 58 has not been reprobated by the
President; therefore, it goes without saying that the said
Memorandum Circular has the approval of the President.
Tiu v. Dizon, G.R. No. 211269, 15 June 2016.
Topic: Qualified Political Agency
Recitation Version:
Ruben Tiu was found guilty for illegally selling shabu and was sentenced to suffer
the penalty of reclusion perpetua and pay the fine of 10M. In this case, Petitioner
filed a Petition for Habeas Corpus, insisting on the efficacy of his conditional
pardon without parole conditions. Furthermore, he said he was granted by the
Director of Corrections Pangilinan a colonist status so, his sentence should be
automatically reduced to thirty (30) years based on the Bureau of
Corrections Operating Manual. In addition this, he claims that he is entitled to
nineteen (19) years and seven (7) months of GCTA which when tacked to his
actual service would be more than his alleged reduced sentence of thirty (30)
years. Although the said reduction requires executive approval for such
classification, he said that the Director of Corrections has the authority to so classify
him based in the Bureau of Corrections Operating Manual.
The Court did not grant the petition because he failed to show that he is entitled.
No individual pardon papers were issued in petitioner's favour, thereby rendering
the grant of executive clemency to him as incomplete and ineffective.
Furthermore, the conferment by the Director of Corrections of a colonist
status to petitioner did not operate to reduce the latter's sentence. The act
of classification as a penal colonist or trustie is separate from and necessarily
precedes the act of approval by the Executive. The foregoing is bolstered by the
fact that the reduction of a prisoner's sentence is a partial pardon, and our
Constitution reposes in the President the power and the exclusive
prerogative to extend the same. It has long been recognized that the exercise
of the pardoning power, notwithstanding the judicial determination of guilt of the
accused, demands the exclusive exercise by the President of the constitutionally
vested power. Stated otherwise, since the Chief Executive is required by the
Constitution to act in person, he may not delegate the authority to pardon prisoners
under the doctrine of qualified political agency.
Facts:
1. On June 16, 2000, petitioner and two others were found guilty beyond
reasonable doubt by the RTC for selling, delivering, and giving away to a
poseur-buyer 1,977 grams of methamphetamine hydrochloride /"shabu," a
regulated drug, without authority of law or corresponding license therefor.
Consequently, they were sentenced to suffer the penalty of reclusion
perpetua and to pay the fine of P10,000,000.00 each.
2. On March 24, 2009, the Board of Pardons and Parole (BPP) recommended
the grant of executive clemency to petitioner. Acting on said
recommendation, PGMA granted him "conditional pardon without parole
conditions," but was still "subject to the conditions indicated in [the
individual pardon papers]."
a. No such papers were issued in petitioner's favor.
b. Petitioner repeatedly requested for a certificate of conditional
pardon without parole conditions from the Legal Affairs Office of
the Office of the President (OP)
c. Said requests were denied by Deputy Executive Secretary for
Legal Affairs Michael G. Aguinaldo since it was not signed yet by
PGMA, his case was returned to BPP and was resolve to deferred.
3. In the meantime, President Benigno Simeon C. Aquino III signed into law
Republic Act No. (RA) 10592, which, would substantially increase the Good
Conduct Time Allowance (GCTA) of qualified inmates.
a. Petitioner's carpeta was returned to the Bureau of Corrections in
Muntinlupa City for the re-computation of his time served.
4. petitioner filed the instant Amended Petition for Habeas Corpus,
insisting on the efficacy and enforceability of his conditional pardon without
parole conditions, which allegedly necessitates his release from prison.
Further, he claims that he is entitled to nineteen (19) years and seven
(7) months of GCTA, computed hereafter, which, when tacked to his
actual service of fourteen (14) years and nine (9) months, would add up to
thirty-four (34) years and four (4) months, or more than his alleged
reduced sentence of thirty (30) years:
a. He argues that, since he was granted a "colonist status" by
then Director of Corrections Gaudencio S. Pangilinan (Director of
Corrections Pangilinan), his sentence was automatically
reduced to thirty (30) years pursuant to Section 7 (b),
Chapter 3, Part II, Book I of the Bureau of Corrections Operating
Manual (BuCor-OM)
5. Although said law requires executive approval for such classification, his
colonist status was "regularly awarded" by the Director of Corrections
whose authority to so classify him as such is derived from Section 6,
Chapter 3, Part II, Book I of the BuCor-OM.
6. Finally, petitioner invokes Section 5 of RA 10592, which provides that the
time allowances for good conduct once granted shall not be revoked.
a. He further proposes that RA 10592 be given retroactive effect
in light of the liberal construction provided for in the rules to favor
detained or convicted prisoners like him.
7. OSG. The OSG said that a prisoner serving a sentence of life imprisonment
receiving and retaining classification as a penal colonist will automatically
have his sentence modified to thirty (30) years of imprisonment only "when
receiving the executive approval for this classification. "However,
petitioner failed to obtain such executive approval.
 8. They argue further against petitioner's reliance on the BuCor-OM, which is a
mere administrative rule or regulation that cannot amend Act No.
2489 by abridging or expanding its scope. Petitioner's colonist status
granted merely by the Director of Corrections, without executive approval,
did not modify his sentence. Hence, there being no unlawful restraint, no
writ of habeas corpus should be issued in his favor.
Issue: Whether a writ of habeas corpus shall be issued
[The object of the writ of habeas corpus is to inquire into the legality of the
detention, and, if the detention is found to be illegal, to require the release
of the detainee]
Ruling: No
Rationale:
No Ex merito justicias
- Well-settled is the rule that the writ will not issue where the person in
whose behalf the writ is sought is in the custody of an officer under process
issued by a court or judge with jurisdiction or by virtue of a judgment or
order of a court of record. The writ is denied if the petitioner fails to show
facts that he is entitled thereto ex merito justicias.
Petitioner's insistence on the efficacy and enforceability of the conditional
pardon without parole conditions granted to him by PGMA on June 3, 2010
deserves scant consideration.
- No individual pardon papers were issued in petitioner's favour, thereby
rendering the grant of executive clemency to him as incomplete and
ineffective
- the individual pardon papers is necessary because it is "a contract
between the sovereign power or the Chief Executive and the convicted
criminal to the effect that the former will release the latter subject to the
condition that if he does not comply with the terms of the pardon, he will be
recommitted to prison to serve the unexpired portion of the sentence or an
additional one. By the pardonee's consent to the terms stipulated in this
contract, the pardonee has thereby placed himself under the supervision of
the Chief Executive or his delegate who is duty-bound to see to it that the
pardonee complies with the terms and conditions of the pardon." The
individual pardon papers, therefore, contain the terms and conditions of the
contract of pardon, the compliance of which is essential to the pardonee's
freedom from recommitment to prison.
- Furthermore, the grant of pardon and the determination of the terms and
conditions of a conditional pardon are purely executive acts which are
not subject to judicial scrutiny.
The conferment by the Director of Corrections of a colonist status to
petitioner did not operate to reduce the latter's sentence.
- The act of classification as a penal colonist or trustie is separate from and
necessarily precedes the act of approval by the Executive.
- The foregoing is bolstered by the fact that the reduction of a prisoner's
sentence is a partial pardon, and our Constitution reposes in the
President the power and the exclusive prerogative to extend the
same. The 1987 Constitution, specifically under Section 19, Article VII
thereof, provides that the President possesses the power to grant pardons,
along with other acts of executive clemency, 49 which petitioner explicitly
recognized by applying for commutation of sentence even during the
pendency of his request for the implementation of the conditional pardon.
o It has long been recognized that the exercise of the pardoning
power, notwithstanding the judicial determination of guilt of the
accused, demands the exclusive exercise by the President of
the constitutionally vested power.
o Stated otherwise, since the Chief Executive is required by the
Constitution to act in person, he may not delegate the authority to
pardon prisoners under the doctrine of qualified political agency,
which "essentially postulates that the heads of the various
executive departments are the alter egos of the President, and,
thus, the actions taken by such heads in the performance of their
official duties are deemed the acts of the President unless the
President himself should disapprove such acts."
Others
Manila Prince Hotel v. GSIS, G.R. No. 122156, 03 February 1997.
Topic: Filipino First Policy
Recitation Version:
The GSIS decided to sell 51% of the equity of Manila Hotel Corporation. Manila
Prince Hotel Corporation, a Filipino corporation offered to buy it for 41.88 per share
while Renong Berhad, a Malaysian Firm, offered 44 per share. Pending declaration
of RB as the winning bidder, MPHC matched the bid and issued a bid security.
However, GSIS refused to accept it. Petitioner invoked the Filipino First Policy, but
respondent claimed that the 51% equity is not part of national patrimony and
economy, so the policy is not applicable, and the privilege of submitting a matching
bid has not yet arisen. The Court ruled that the First Filipino Policy is applicable since
it is part of the national patrimony, as a cultural heritage, and economy.
Furthermore, it falls under the term “qualified Filipinos,” especially since it was pre-
qualified by the GSIS. In line with the Filipino First policy, where a foreign firm
submits the highest bid in a public bidding concerning the grant of rights, privileges
and concessions covering the national economy and patrimony, thereby exceeding
the bid of a Filipino, there is no question that the Filipino will have to be allowed
to match the bid of the foreign entity. And if the Filipino matches the bid of a
foreign firm the award should go to the Filipino. Since petitioner has already matched
the bid price tendered by Renong Berhad pursuant to the bidding rules, respondent
GSIS is left with no alternative but to award to petitioner the block of shares of MHC.
Facts:
1. The Government Service Insurance System (GSIS) decided to sell through
public bidding 30% to 51% of the issued and outstanding shares of
respondent Manila Hotel Corporation.
a. The winning bidder will provide management expertise and
financial support to strengthen the profitability and performance of
the Manila Hotel.
2. In a close bidding, only two (2) bidders participated: petitioner Manila
Prince Hotel Corporation, a Filipino corporation, which offered to buy 51%
of the MHC or 15,300,000 shares at P41.58 per share, and Renong
Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid
for the same number of shares at P44.00 per share, or P2.42 more than
the bid of petitioner.
3. Pending the declaration of Renong Berhard as the winning bidder, petitioner
matched the bid price of P44.00 per share tendered by Renong Berhad
and sent a manager's check 33M Pesos as Bid Security, which respondent
GSIS refused to accept.
4. Petitioner came to this Court on prohibition and mandamus.
5. Petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution
a. NATIONAL PATRIMONY. It submits that the Manila Hotel, as a
historical monument which reflects the vibrancy of Philippine
heritage and culture, has become a part of the national
patrimony.
b. NATIONAL ECONOMY. Since 51% of the shares of the MHC carries
with it the ownership of the business of the hotel which is owned
by respondent GSIS, a government-owned and controlled
corporation, the hotel business of respondent GSIS being a part of
the tourism industry is unquestionably a part of the national
economy.
c. FILIPINO FIRST POLICY. Since Manila Hotel is part of the national
patrimony and its business also unquestionably part of the national
economy petitioner should be preferred after it has matched the
bid offer of the Malaysian firm.
6. Respondents claim that
a. Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a
statement of principle and policy since it is not a self executing
provision
b. Manila Hotel does not fall under the term national patrimony
which only refers to lands of the public domain, waters, etc.
c. 51% of the equity of the MHC cannot be considered part of the
national patrimony
d. The privilege of submitting a matching bid has not yet
arisen since it only takes place if for any reason, the Highest
Bidder cannot be awarded the Block of Shares.
e. The prayer for prohibition grounded on grave abuse of
discretion should fail since respondent GSIS did not exercise its
discretion in a capricious, whimsical manner
f. The petition for mandamus should fail as petitioner has no
clear legal right to what it demands and respondents do not have
an imperative duty to perform the act required of them by
petitioner.
Issue: Whether First Filipino Policy should apply?
Ruling: Yes
Rationale:
It is part of the National Patrimony
When the Constitution speaks of national patrimony, it refers not only to the natural
resources of the Philippines, but also to the cultural heritage of the Filipinos. Manila
Hotel has become a landmark — a living testimonial of Philippine heritage.
It is part of the National Economy
-
whom all government authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can have no higher
purpose. Any interpretation of any constitutional provision must adhere to
such basic concept. Protection of foreign investments, while laudable, is
merely a policy. It cannot override the demands of nationalism.

- Manila Hotel has become part of our national economy and patrimony. For
sure, 51% of the equity of the MHC comes within the purview of the
constitutional shelter for it comprises the majority and controlling stock, so
that anyone who acquires or owns the 51% will have actual control and
management of the hotel. In this instance, 51% of the MHC cannot be
disassociated from the hotel and the land on which the hotel edifice stands.
- Consequently, we cannot sustain respondents' claim that the Filipino First
Policy provision is not applicable since what is being sold is only 51% of the
outstanding shares of the corporation, not the Hotel building nor the land
upon which the building stands.
Qualified Filipinos
GSIS must award
Since petitioner has already matched the bid price tendered by Renong Berhad pursuant
to the bidding rules, respondent GSIS is left with no alternative but to award to
petitioner the block of shares of MHC and to execute the necessary agreements and
documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of respondent GSIS to execute
the corresponding documents with petitioner as provided in the bidding rules after the
latter has matched the bid of the Malaysian firm clearly constitutes grave abuse of
discretion.

Others
- The word qualified is also determinable.
- Petitioner was so considered by respondent GSIS and selected as one of the
qualified bidders. It was pre-qualified by respondent GSIS in accordance with It is self-executing
its own guidelines so that the sole inference here is that petitioner has been
found to be possessed of proven management expertise in the hotel industry,
Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command
or it has significant equity ownership in another hotel company, or it has an
which is complete in itself and which needs no further guidelines or implementing laws
overall management and marketing proficiency to successfully operate the
or rules for its enforcement. From its very words the provision does not require any
Manila Hotel.
legislation to put it in operation.

Filipino First is Applicable

Respondents further argue that the constitutional provision is addressed to the State,
not to respondent GSIS which by itself possesses a separate and distinct personality.
- In the instant case, where a foreign firm submits the highest bid in a public
bidding concerning the grant of rights, privileges and concessions covering
- the sale of 51% of the MHC could only be carried out with the prior approval
the national economy and patrimony, thereby exceeding the bid of a Filipino,
of the State acting through respondent Committee on Privatization. As
there is no question that the Filipino will have to be allowed to match the bid
correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the
of the foreign entity. And if the Filipino matches the bid of a foreign firm the
sale of the assets of respondents GSIS and MHC a "state action." Without
award should go to the Filipino. It must be so if we are to give life and
doubt therefore the transaction, although entered into by respondent GSIS,
meaning to the Filipino First Policy provision of the 1987 Constitution. For,
is in fact a transaction of the State and therefore subject to the constitutional
while this may neither be expressly stated nor contemplated in the bidding
command.
rules, the constitutional fiat is omnipresent to be simply disregarded. To
ignore it would be to sanction a perilous skirting of the basic law.
- Foreigners may be awarded the sale only if no Filipino qualifies, or if the
qualified Filipino fails to match the highest bid tendered by the foreign entity.
- T h e Filipino First Policy is a product of Philippine nationalism. Nationalism is
inherent in the very concept of the Philippines being a democratic and
republican state, with sovereignty residing in the Filipino people and from
Narra Nickel Mining and Development Corp. v. Redmont Consolidated Mines
Corp., G.R. No. 195580, 21 April 2014.
Topic:
Recitation Version:
Redmont, a domestic corporation, took interest in mining and exploring certain
areas of the province of Palawan. After inquiring with the DENR, the areas it wanted
were already covered by Mineral Production Sharing Agreement (MPSA)
applications of petitioners Narra, Tesoro and McArthur. Redmont filed before
the Panel of Arbitrators (POA) petitions for the denial of petitioners'
applications for MPSA. It alleged that at least 60% of their capital stock
are owned and controlled by MBMI Resources, Inc. (MBMI), a 100%
Canadian corporation. Therefore, they must be disqualified from engaging in
mining activities through MPSAs, which are reserved only for Filipino
citizens. Petitioners averred that they are Philippine Nationals through the
control test and their nationality as applicants is immaterial because they also
applied for Financial or Technical Assistance Agreements (FTAA). The grandfather
rule is not provided in the FIA so the application of the control test is obligatory and
the rule is no longer the applicable. They also opined that the last portion of Sec. 3
of the FIA admits the application of a "corporate layering" scheme of corporations.
The Court ruled that the grandfather rule must be applied since there is doubt and
corporate layering, and even if the stockholdings are not less than 60%.
Facts:
1. 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.
2. 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.
3. Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3)
separate petitions for the denial of petitioners' applications for MPSA
a. 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.
b. 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.
4. Petitioners averred that they were qualified persons under the Philippine
Mining Act
a. They claimed they are in fact Philippine Nationals as 60% of their
capital is owned by citizens of the Philippines.
b. 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
c. their nationality as applicants is immaterial because they also
applied for Financial or Technical Assistance Agreements (FTAA)
5. The Panel of Arbitrators issued a Resolution disqualifying petitioners
from gaining MPSAs because they are considered as foreign corporations
"effectively controlled" by MBMI, a 100% Canadian company and declared
their MPSAs null and void.
a. The petitioners filed an appeal before the Mines Adjudication
Board (MAB)
b. Meanwhile, Redmont filed a Complaint with the Securities and
Exchange Commission (SEC), seeking the revocation of the
certificates for registration of petitioners
c. Redmont filed a Manifestation and Motion to Suspend
Proceeding before the MAB
d. Redmont prayed before the RTC for the deferral of the MAB
proceedings pending the resolution of the Complaint before the
SEC.
6. CA. 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. Therefore, the CA used the
"grandfather rule" to determine the nationality of petitioner
a. 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.
b. The CA found that through a "web of corporate layering, it is clear
that one common controlling investor in all mining corporations
involved . . . is MBMI."
c. Thus, it concluded that petitioners McArthur, Tesoro and Narra are
also in partnership with, or privies-in-interest of, MBMI.
d. 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.
7. Redmont filed with the Office of the President (OP) a petition dated
May 7, 2010 seeking the cancellation of petitioners' FTAAs.
a. 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.
8. 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." 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.
Issue: Whether Narra, Tesoro and McArthur are foreign corporations based on the
"Grandfather Rule"
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.
Others

Ruling: Yes

Rationale:

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.

When there is corporate layering = Grandfather Rule shall apply

It 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.

There is doubt = Grandfather Rule shall apply

Furthermore, the Grandfather Rule applies only when the 60-40 Filipino-
foreign equity ownership is in doubt. The Court finds that this case calls for the
application of the grandfather rule since 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.

Doubt may exist, even if the stockholdings are not less than 60%

- The assertion of petitioners that "doubt" only exists when the stockholdings
are less than 60% fails to convince this Court. 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