Garcia v.
Board of Investments, 191 SCRA 288 (1990 it excluded the trade secrets and confidential, commercial, and financial
FACTS:
The Bataan Petrochemical Corporation (BPC), a Taiwanese private
corporation, applied for registration with the Board of Investments (BOI) in
February 1988 as a new domestic producer of petrochemicals in the
Philippines. It originally specified the province of Bataan as the site for the
proposed investment but later submitted an amended application to change
the site to Batangas. Unhappy with the change of the site, Congressman
Enrique Garcia of the Second District of Bataan requested a copy of BPCs
original and amended application documents. The BoI denied the request on
the basis that the investors in BPC had declined to give their consent to the
release of the documents requested, and that Article 81 of the Omnibus
Investments Code protects the confidentiality of these documents absent
consent to disclose. The BoI subsequently approved the amended
application without holding a second hearing or publishing notice of the
amended application. Garcia filed a petition before the Supreme Court.
ISSUE: Whether or not the BoI committed grave abuse of discretion in
yielding to the wishes of the investor, national interest notwithstanding.
RULING:
The Court ruled that the BoI violated Garcias Constitutional right to have
access to information on matters of public concern under Article III, Section 7
of the Constitution. The Court found that the inhabitants of Bataan had an
interest in the establishment of the petrochemical plant in their midst [that] is
actual, real, and vital because it will affect not only their economic life, but
even the air they breathe The Court also ruled that BPCs amended
application was in fact a second application that required a new public notice
to be filed and a new hearing to be held.
Although Article 81 of the Omnibus Investments Code provides that all
applications and their supporting documents filed under this code shall be
confidential and shall not be disclosed to any person, except with the consent
of the applicant, the Court emphasized that Article 81 provides for disclosure
on the orders of a court of competent jurisdiction. The Court ruled that it
had jurisdiction to order disclosure of the application, amended application,
and supporting documents filed with the BOI under Article 81, with certain
exceptions.
The Court went on to note that despite the right to access information, the
Constitution does not open every door to any and all information because
the law may exempt certain types of information from public scrutiny. Thus
information of the applicant BPC, and matters affecting national security
from its order. The Court did not provide a test for what information is
excluded from the Constitutional privilege to access public information, nor
did it specify the kinds of information that BPC could withhold under its ruling.
Lee Hong Hok v. David, 48 SCRA 372 (1972
FACTS:
This is regarding a piece of land which Aniano David acquired lawful title
thereto, pursuant to his miscellaneous sales application. After approval of his
application, the Director of Lands issued an order of award and issuance of
sales patent, covering said lot by virtue of which the Undersecretary of
Agriculture and Natural Resources issued a Miscellaneous Sales Patent. The
Register of Deeds then issued an original certificate of title to David.
During all this time, Lee Hong Kok did not oppose nor file any adverse claim.
ISSUE:
Whether or not Lee Hong Kok may question the government grant
HELD:
Only the Government, represented by the Director of Lands or the Secretary
of Agriculture and Natural Resources, can bring an action to cancel a void
certificate of title issued pursuant to a void patent. This was not done by said
officers but by private parties like the plaintiffs, who cannot claim that the
patent and title issued for the land involved are void since they are not the
registered owners thereof nor had they been declared as owners in the
cadastral proceedings after claiming it as their private property.
The fact that the grant was made by the government is undisputed. Whether
the grant was in conformity with the law or not is a question which the
government may raise, but until it is raised by the government and set aside,
the defendant cannot question it. The legality of the grant is a question
between the grantee and the government.
IMPERIUM vs. DOMINIUM:
The government authority possessed by the State which is appropriately
embraced int eh concept of sovereignty comes under the heading of
1
imperium; its capacity to own or acquire property under dominium. The use
of this term is appropriate with reference to lands held by the State in its
proprietary character. In such capacity, it may provide for the exploitation and
use of lands and other natural resources, including their disposition, except
as limited by the Constitution.
Carino v. Insular Government, 41 Phil. 935 (1909
On June 23, 1903, Mateo Cario went to the Court of Land Registration
(CLR) to petition his inscription as the owner of a 146 hectare land hes been
possessing in the then municipality of Baguio. Mateo only presented
possessory information and no other documentation. The State opposed the
petition averring that the land is part of the US military reservation. The CLR
ruled in favor of Mateo. The State appealed. Mateo lost. Mateo averred that a
grant should be given to him by reason of immemorial use and occupation as
in the previous cases Cansino vs Valdez and Tiglao vs Government; and that
the right of the State over said land has prescribed.
ISSUE: Whether or not Mateo is the rightful owner of the land by virtue of his
possession of it for some time.
HELD: No. The statute of limitations did not run against the government. The
government is still the absolute owner of the land (regalian doctrine). Further,
Mateos possession of the land has not been of such a character as to
require the presumption of a grant. No one has lived upon it for many years.
It was never used for anything but pasturage of animals, except insignificant
portions thereof, and since the insurrection against Spain it has apparently
not been used by Cario for any purpose.
While the State has always recognized the right of the occupant to a deed if
he proves a possession for a sufficient length of time, yet it has always
insisted that he must make that proof before the proper administrative
officers, and obtain from them his deed, and until he did the State remained
the absolute owner.
Republic v. Quasha, 46 SCRA 160 (1972
FACTS:
William H. Quasha
a member of the Philippine bar, committed a crime
of falsification of a public and commercial document for
causing it to appear that Arsenio Baylon, a Filipino citizen,
had subscribed to and was the owner of 60.005 % of the
subscribed capital stock of Pacific Airways Corp.
(Pacific) when in reality the money paid belongs to an
American citizen whose name did not appear in the article of
incorporation,
to circumvent the constitutional mandate
that no corp. shall be authorize to operate as a
public utility in the Philippines unless 60% of its
capital stock is owned by Filipinos.
Found guilty after trial and sentenced to a term of
imprisonment and a fine
Quasha appealed to this Court
Primary purpose: to carry on the business of a common
carrier by air, land or water
Baylon did not have the controlling vote because of the
difference in voting power between the preferred shares and the
common shares
ART. 171. Falsification by public officer, employee, or notary
or ecclesiastic minister. The penalty of prision mayor and a fine
not to exceed 5,000 pesos shall be imposed upon any public officer,
employee, or notary who, taking advantage of his official position,
shall falsify a document by committing any of the following acts:
4. Making untruthful statements in a narration of facts.
ART. 172. Falsification by private individuals and use of
falsified documents. The penalty of prision correccional in its
medium and maximum period and a fine of not more than 5,000
pesos shall be imposed upon:
1. Any private individual who shall commit any of the falsifications
enumerated in the next preceding
article in any public or official document or letter of exchange or any
other kind of commercial
document.
ISSUE: W/N Quasha should be criminally liable
HELD: NO. Acquitted.
falsification consists in not disclosing in the articles of
incorporation that Baylon was a mere trustee ( or dummy as the
prosecution chooses to call him) of his American co-incorporators,
thus giving the impression that Baylon was the owner of the shares
subscribed to by him
For the mere formation of the corporation such revelation
2
 was not essential, and the Corporation Law does not require it
The moment for determining whether a corporation is entitled
to operate as a public utility is when it applies for a franchise,
certificate, or any other form of authorization for that purpose.
that can be done after the corporation has already
come into being and not while it is still being formed
so far as American citizens are concerned, the said act has
ceased to be an offense within the meaning of the law, so that defendant can
no longer be held criminally liable therefor.
Krivenko v. Register of Deeds, 79 Phil. 461 (1947
Facts:
Alenxander A. Kriventor is an alien (foreigner) who bought a residential lot
from the Magdalena Estate, Inc., in December of 1941. The registration of
which was interrupted by the war.
In May 1945, he registered the lot but was denied by the register of deeds of
Manila on the ground that, being an alien, he cannot acquire land in this
jurisdiction. Krivenko then brought the case to the fourth branch of the Court
of First Instance of Manila by means of a consulta, and that court rendered
judgment sustaining the refusal of the register of deeds, from which Krivenko
appealed to this Court.
Issue:
Whether or not an alien under our Constitution may acquire residential land?
Held:
According to Rule 52, section 4, of the Rules of Court, it is discretionary upon
this Court to grant a withdrawal of appeal after the briefs have been
presented. At the time the motion for withdrawal was filed in this case, not
only had the briefs been presented, but the case had already been voted and
the majority decision was being prepared. The motion for withdrawal stated
no reason whatsoever, and the Solicitor General was agreeable to it. While
the motion was pending in this Court, there came the new circular of the
Department of Justice, instructing all register of deeds to accept for
registration all transfers of residential lots to aliens.
The herein respondent-appellee was naturally one of the registers of deeds
to obey the new circular, as against his own stand in this case which had
been maintained by the trial court and firmly defended in this Court by the
Solicitor General.
If the Court grants the withdrawal, the result would be that petitioner-
appellant Alexander A. Krivenko wins his case, not by a decision of this
Court, but by the decision or circular of the Department of Justice, issued
while this case was pending before this Court.
For it is but natural that the new circular be taken full advantage of by many,
with the circumstance that perhaps the constitutional question may never
come up again before this court, because both vendors and vendees will
have no interest but to uphold the validity of their transactions, and very
unlikely will the register of deeds venture to disobey the orders of their
superior. Thus, the possibility for this court to voice its conviction in a future
case may be remote, with the result that our indifference of today might
signify a permanent offense to the Constitution.
All these circumstances were thoroughly considered and weighted by this
Court for a number of days and the legal result of the last vote was a denial
of the motion withdrawing the appeal. We are thus confronted, at this stage
of the proceedings, with our duty, the constitutional question becomes
unavoidable. We shall then proceed to decide that question.
Article XIII. Conservation and Utilization of Natural Resources.
The scope of this constitutional provision, according to its heading and its
language, embraces all lands of any kind of the public domain, its purpose
being to establish a permanent and fundamental policy for the conservation
and utilization of all natural resources of the Nation. When, therefore, this
provision, with reference to lands of the public domain, makes mention of
only agricultural, timber and mineral lands, it means that all lands of the
public domain are classified into said three groups, namely, agricultural,
timber and mineral. And this classification finds corroboration in the
circumstance that at the time of the adoption of the Constitution, that was the
basic classification existing in the public laws and judicial decisions in the
Philippines, and the term "public agricultural lands" under said classification
had then acquired a technical meaning that was well-known to the members
of the Constitutional Convention who were mostly members of the legal
profession.
As early as 1908, in the case of Mapa vs. Insular Government (10 Phil., 175,
182), this Court said that the phrase "agricultural public lands" as defined in
the Act of Congress of July 1, 1902, which phrase is also to be found in
several sections of the Public Land Act (No. 926), means "those public lands
3
acquired from Spain which are neither mineral for timber lands."
Scope of Public Agricultural Lands
This definition has been followed in long line of decisions of this Court. And
with respect to residential lands, it has been held that since they are neither
mineral nor timber lands, of necessity they must be classified as agricultural.
In Ibaez de Aldecoa vs. Insular Government (13 Phil., 159, 163), this Court
said:
Hence, any parcel of land or building lot is susceptible of cultivation, and may
be converted into a field, and planted with all kinds of vegetation; for this
reason, where land is not mining or forestal in its nature, it must necessarily
be included within the classification of agricultural land, not because it is
actually used for the purposes of agriculture, but because it was originally
agricultural and may again become so under other circumstances; besides,
the Act of Congress contains only three classification, and makes no special
provision with respect to building lots or urban lands that have ceased to be
agricultural land.
In other words, the Court ruled that in determining whether a parcel of land is
agricultural, the test is not only whether it is actually agricultural, but also its
susceptibility to cultivation for agricultural purposes. But whatever the test
might be, the fact remains that at the time the Constitution was adopted,
lands of the public domain were classified in our laws and jurisprudence into
agricultural, mineral, and timber, and that the term "public agricultural lands"
was construed as referring to those lands that were not timber or mineral,
and as including residential lands. It may safely be presumed, therefore, that
what the members of the Constitutional Convention had in mind when they
drafted the Constitution was this well-known classification and its technical
meaning then prevailing.
Therefore, the phrase "public agricultural lands" appearing in section 1 of
Article XIII of the Constitution must be construed as including residential
lands, and this is in conformity with a legislative interpretation given after the
adoption of the Constitution.
It is true that in section 9 of said Commonwealth Act No. 141, "alienable or
disposable public lands" which are the same "public agriculture lands" under
the Constitution, are classified into agricultural, residential, commercial,
industrial and for other purposes.
Section 1, Article XII (now XIII) of the Constitution classifies lands of the
public domain in the Philippines into agricultural, timber and mineral. This is
the basic classification adopted since the enactment of the Act of Congress
of July 1, 1902, known as the Philippine Bill. At the time of the adoption of the
Constitution of the Philippines, the term 'agricultural public lands' and,
therefore, acquired a technical meaning in our public laws. The Supreme
Court of the Philippines in the leading case of Mapa vs. Insular Government,
10 Phil., 175, held that the phrase 'agricultural public lands' means those
public lands acquired from Spain which are neither timber nor mineral lands.
This definition has been followed by our Supreme Court in much subsequent
case.
Residential, commercial, or industrial lots forming part of the public domain
must have to be included in one or more of these classes. Clearly, they are
neither timber nor mineral, of necessity, therefore, they must be classified as
agricultural.
It is thus clear that the three great departments of the Government judicial,
legislative and executive have always maintained that lands of the public
domain are classified into agricultural, mineral and timber, and that
agricultural lands include residential lots.
Scope of Private Agricultural Lands
Sec. 5. Save in cases of hereditary succession, no private agricultural land
will be transferred or assigned except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the
Philippines.
This constitutional provision closes the only remaining avenue through which
agricultural resources may leak into aliens' hands. It would certainly be futile
to prohibit the alienation of public agricultural lands to aliens if, after all, they
may be freely so alienated upon their becoming private agricultural lands in
the hands of Filipino citizens.
Undoubtedly, as above indicated, section 5 is intended to insure the policy of
nationalization contained in section 1. Both sections must, therefore, be read
together for they have the same purpose and the same subject matter. It
must be noticed that the persons against whom the prohibition is directed in
section 5 are the very same persons who under section 1 are disqualified "to
acquire or hold lands of the public domain in the Philippines."
The subject matter of both sections is the same, namely, the non-
transferability of "agricultural land" to aliens. Since "agricultural land" under
section 1 includes residential lots, the same technical meaning should be
attached to "agricultural land under section 5.
4
If the term "private agricultural lands" is to be construed as not including
residential lots or lands not strictly agricultural, the result would be that
"aliens may freely acquire and possess not only residential lots and houses
for themselves but entire subdivisions, and whole towns and cities," and that
"they may validly buy and hold in their names lands of any area for building
homes, factories, industrial plants, fisheries, hatcheries, schools, health and
vacation resorts, markets, golf courses, playgrounds, airfields, and a host of
other uses and purposes that are not, in appellant's words, strictly
agricultural." (Solicitor General's Brief, p. 6.) That this is obnoxious to the
conservative spirit of the Constitution is beyond question.
One of the fundamental principles underlying the provision of Article XIII of
the Constitution and which was embodied in the report of the Committee on
Nationalization and Preservation of Lands and other Natural Resources of
the Constitutional Convention, is "that lands, minerals, forests, and other
natural resources constitute the exclusive heritage of the Filipino nation.
They should, therefore, be preserved for those under the sovereign authority
of that nation and for their posterity." (2 Aruego, Framing of the Filipino
Constitution, p. 595.)
Lands and natural resources are immovables and as such can be compared
to the vital organs of a person's body, the lack of possession of which may
cause instant death or the shortening of life. If we do not completely
nationalize these two of our most important belongings, I am afraid that the
time will come when we shall be sorry for the time we were born. Our
independence will be just a mockery, for what kind of independence are we
going to have if a part of our country is not in our hands but in those of
foreigners?" (Emphasis ours.)
Approval of R.A. No. 133
And, finally, on June 14, 1947, the Congress approved Republic Act No. 133
which allows mortgage of "private real property" of any kind in favor of aliens
but with a qualification consisting of expressly prohibiting aliens to bid or take
part in any sale of such real property as a consequence of the mortgage.
This prohibition makes no distinction between private lands that are strictly
agricultural and private lands that are residential or commercial. The
prohibition embraces the sale of private lands of any kind in favor of aliens,
which is again a clear implementation and a legislative interpretation of the
constitutional prohibition. Had the Congress been of opinion that private
residential lands may be sold to aliens under the Constitution, no legislative
measure would have been found necessary to authorize mortgage which
would have been deemed also permissible under the Constitution. But clearly
it was the opinion of the Congress that such sale is forbidden by the
Constitution and it was such opinion that prompted the legislative measure
intended to clarify that mortgage is not within the constitutional prohibition.
We are satisfied, however, that aliens are not completely excluded by the
Constitution from the use of lands for residential purposes. Since their
residence in the Philippines is temporary, they may be granted temporary
rights such as a lease contract which is not forbidden by the Constitution.
Should they desire to remain here forever and share our fortunes and
misfortunes, Filipino citizenship is not impossible to acquire.
For all the foregoing, we hold that under the Constitution aliens may not
acquire private or public agricultural lands, including residential lands, and,
accordingly, judgment is affirmed, without costs.
Laurel v. Garcia, 187 SCRA 797 (1990
Facts:
Petitioners seek to stop the Philippine Government to sell the Roppongi
Property, which is located in Japan. It is one of the properties given by the
Japanese Government as reparations for damage done by the latter to the
former during the war.
Petitioner argues that under Philippine Law, the subject property is property
of public dominion. As such, it is outside the commerce of men. Therefore, it
cannot be alienated.
Respondents aver that Japanese Law, and not Philippine Law, shall apply to
the case because the property is located in Japan. They posit that the
principle of lex situs applies.
Issues and Held:
1. WON the subject property cannot be alienated.
The answer is in the affirmative.
Under Philippine Law, there can be no doubt that it is of public dominion
unless it is convincingly shown that the property has become patrimonial.
This, the respondents have failed to do. As property of public dominion, the
Roppongi lot is outside the commerce of man. It cannot be alienated.
2. WON Philippine Law applies to the case at bar.
The answer is in the affirmative.
We see no reason why a conflict of law rule should apply when no conflict of
law situation exists. A conflict of law situation arises only when: (1) There is a
dispute over the title or ownership of an immovable, such that the capacity to
take and transfer immovables, the formalities of conveyance, the essential
validity and effect of the transfer, or the interpretation and effect of a
conveyance, are to be determined; and (2) A foreign law on land ownership
and its conveyance is asserted to conflict with a domestic law on the same
5
matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no
question that the property belongs to the Philippines. The issue is the
authority of the respondent officials to validly dispose of property belonging to
the State. And the validity of the procedures adopted to effect its sale. This is
governed by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the
relevance of the lex situs rule is misplaced. The opinion does not tackle the
alienability of the real properties procured through reparations nor the
existence in what body of the authority to sell them. In discussing who are
capable of acquiring the lots, the Secretary merely explains that it is the
foreign law which should determine who can acquire the properties so that
the constitutional limitation on acquisition of lands of the public domain to
Filipino citizens and entities wholly owned by Filipinos is inapplicable.
Cheesman v. IAC, 193 SCRA 93 (1991
G.R. No. 74833 January 21, 1991
FACTS: This appeal concerns the attempt by an American citizen
(petitioner Thomas Cheesman) to annulfor lack of consent on his partthe
sale by his Filipino wife (Criselda) of a residential lot and building to Estelita
Padilla
December 4, 1970 Thomas Cheesman and Criselda Cheesman were
married but have been separated since February 15, 1981
June 4, 1974 a Deed of Sale and Transfer of Possessory Rights was
executed by Armando Altares, conveying a parcel of land in favor of
Criselda Cheesman, married to Thomas Cheesman. Thomas, although
aware of the deed, did not object to the transfer being made only to his wife.
Tax declarations for the said property were issued in the name of Criselda
Cheesman alone and she assumed exclusive management and
administration of the property
July 1, 1981 Criselda sold the property to Estelita Padilla without
knowledge and consent of Thomas
July 31, 1981 Thomas filed a suit for the annulment of the sale on the
ground that the transaction had been executed without his knowledge and
consent. Criselda filed an answer alleging that the property sold was
paraphernal, having purchased the property from her own money; that
Thomas, an American was disqualified to have any interest or right
of ownership in the land and; that Estelita was a buyer in good faith
During the trial, it was found out that the transfer of property took place
during the existence of their marriage as it was acquired on June 4, 1974
June 24, 1982 RTC declared the sale executed by Criselda void ab initio
and ordered the delivery of the property to Thomas as administrator of the
conjugal property
Thomas appealed to IAC where he assailed the granting of Estelitas petition
for relief and resolution of matters not subject of said petition; in declaring
valid the sale to Estelita without his knowledge and consent. On January 7,
1986, IAC affirmed summary judgment decision
ISSUE: Whether or not the wife can dispose of the property in question;
Whether or not Cheesman, being an American citizen, can question the sale
HELD: Section 14, Art. XIV of 1973 Constitution provides that: save in cases
of hereditary succession, no private land shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or
hold lands of the public domain. Thus, assuming that it was his intention that
the lot in question be purchased by him and his wife, he acquired no right
whatsoever over the property by virtue of that purchase; and in attempting to
acquire a right or interest in land, he was knowingly violating the Constitution.
As such, the sale to him was null and void. At any rate, Cheesman had and
has NO CAPACITY TO QUESTION THE SUBSEQUENTSALE OF THE
SAME PROPERTY BY HIS WIFE ON THE THEORY THAT IN SO DOING
HEIS MERELY EXERCISING THE PREROGATIVE OF A HUSBAND IN
RESPECT OFCONJUGAL PROPERTY. To sustain such a theory would
permit indirect controversion of the Constitutional prohibition.
If the property were to be declared conjugal, this would accord to the alien
husband a not insubstantial interest and right over land, as he would then
have a decisive vote as to its transfer or disposition. This is a right that the
Constitution does not permit him to have.
Even if the wife did use conjugal funds to make the acquisition, his
recovering and holding the property cannot be warranted as it is against the
constitution. Consequently, Estelita is a purchaser in good faith since she
knew that Thomas cannot intervene in the sale or disposition of the said
property.
DECISION: The Court AFFIRMED the appealed decision.
Hulst v. PR Builders, 532 SCRA 74 (2007); 566 SCRA 333 (2008
Hulst v. PR Builders
G.R. No. 156364
September 3, 2007
Sec. 7 Art. XII of the Constitution: Save in cases of hereditary succession,
no private lands shall be transferred or conveyed except to individuals,
6
corporations, or associations qualified to acquire or hold lands of the public
domain.
FACTS:
Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna
Hulst-Van Ijzeren (Ida), Dutch nationals, entered into a Contract to Sell with
PR Builders, Inc. (respondent), for the purchase of a 210-sqm residential unit
in respondent's townhouse project in Barangay Niyugan, Laurel, Batangas.
When respondent failed to comply with its verbal promise to complete the
project by June 1995, the spouses Hulst filed before the Housing and Land
Use Regulatory Board (HLURB) a complaint for rescission of contract with
interest, damages and attorney's fees, docketed as HLRB Case No. IV6-
071196-0618. HLURB rendered a decision favoring the spouses. The
Spouses got divorced and Ida assigned her right over the purchased
property to Hulst. the HLURB Arbiter issued a Writ of Execution addressed to
the Ex-Officio Sheriff of the Regional Trial Court of Tanauan, Batangas
directing the latter to execute its judgment. The Ex-Officio Sheriff proceeded
to implement the Writ of Execution. However, upon complaint of respondent
with the CA on a Petition for Certiorari and Prohibition, the levy made by the
Sheriff was set aside, requiring the Sheriff to levy first on respondent's
personal properties but was returned unsatisfied. Upon petitioner's motion,
the HLURB Arbiter issued an Alias Writ of Execution. The Sheriff levied on
respondent's 15 parcels of land covered by 13 Transfer Certificates of Title
(TCT) in Barangay Niyugan, Laurel, Batangas. the Sheriff set the public
auction of the levied properties on April 28, 2000 at 10:00am.. At 10:15 a.m.
of the scheduled auction date of April 28, 2000, respondent's counsel
objected to the conduct of the public auction on the ground that respondent's
Urgent Motion to Quash Writ of Levy was pending resolution. Absent any
restraining order from the HLURB, the Sheriff proceeded to sell the 15
parcels of land. Holly Properties Realty Corporation was the winning bidder
for all 15 parcels of land for the total amount of P5,450,653.33. The sum of
P5,313,040.00 was turned over to the petitioner in satisfaction of the
judgment award after deducting the legal fees. The Sheriff was ordered by
the HLURB Arbiter to susppend the proceedings on the matter. Four months
later, or on August 28, 2000, the HLURB Arbiter and HLURB Director issued
an Order setting aside the sheriff's levy on respondent's real properties, they
reasoned that they could not allow it since there was a great disparity
between the alleged values declared by the parties specifically on how much
the properties were sold for.
ISSUE:
1. Whether or not the CA gravely erred in affirming the decision of the
Labor Arbiter setting aside the levy made by the sheriff on the subject
property?
HELD:
1. Yes , The Court held that the Ca and LA gravely erred because there
was no factual basis for them to state that the value of the property was
gravely disproportionate to the price it was sold. Also the petitioners are not
barred from filing for rescission of contract and damages since they have a
legal right, eventhough under Sec 7 of Art XII of the Constitution states that
alien cannot own land except upon hereditary succession. This contract
being merely a contract to sell and the subject of the contract(property) was
never delivered to the spouses, hence there was no violation of the
constitutional provision. Also under Art 1414 par 4 of the Civil Code allows
the petitioner for filing for damages for a void contract since it was done
before the contract could be accomplished.
Philippine Banking Corp. v. Lui She, 21 SCRA 52 (1967)
DOCTRINE:
Even if the contract appears to be valid, if the provisions is against a
constitutional prohibition, the same should be considered null and void.
FACTS:
Justina Santos executed on a contract of lease in favor of Wong, covering
the portion then already leased to him and another portion fronting Florentino
Torres street. The lease was for 50 years, although the lessee was given the
right to withdraw at any time from the agreement.
On December 21 she executed another contract giving Wong the option to
buy the leased premises for P120,000, payable within ten years at a monthly
installment of P1,000. The option, written in Tagalog, imposed on him the
obligation to pay for the food of the dogs and the salaries of the maids in her
household, the charge not to exceed P1,800 a month. The option was
conditioned on his obtaining Philippine citizenship, a petition for which was
then pending in the Court of First Instance of Rizal.
It appears, however, that this application for naturalization was withdrawn
when it was discovered that he was not a resident of Rizal. On October 28,
1958 she filed a petition to adopt him and his children on the erroneous belief
that adoption would confer on them Philippine citizenship. The error was
discovered and the proceedings were abandoned.
In two wills executed on August 24 and 29, 1959, she bade her legatees to
respect the contracts she had entered into with Wong, but in a codicil of a
later date (November 4, 1959) she appears to have a change of heart.
Claiming that the various contracts were made by her because of
machinations and inducements practiced by him, she now directed her
executor to secure the annulment of the contracts.
ISSUE:
7
 Whether the contracts involving Wong were valid
HELD:
No, the contracts show nothing that is necessarily illegal, but
considered collectively, they reveal an insidious pattern to subvert by
indirection what the Constitution directly prohibits. To be sure, a lease to an
alien for a reasonable period is valid. So is an option giving an alien the right
to buy real property on condition that he is granted Philippine citizenship.
But if an alien is given not only a lease of, but also an option to buy, a
piece of land, by virtue of which the Filipino owner cannot sell or otherwise
dispose of his property, this to last for 50 years, then it becomes clear that
the arrangement is a virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land but also of the right to
dispose of it rights the sum total of which make up ownership. If this can be
done, then the Constitutional ban against alien landholding in the Philippines,
is indeed in grave peril.
Manila Prince Hotel v. GSIS, 267 SCRA 409 (1997)
I. THE FACTS
Pursuant to the privatization program of the Philippine Government, the GSIS
sold in public auction its stake in Manila Hotel Corporation (MHC). Only 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.
Petitioner filed a petition before the Supreme Court to compel the GSIS to
allow it to match the bid of Renong Berhad. It invoked the Filipino First
Policy enshrined in 10, paragraph 2, Article XII of the 1987
Constitution, which provides that in the grant of rights, privileges, and
concessions covering the national economy and patrimony, the State shall
give preference to qualified Filipinos.
II. THE ISSUES
1. Whether 10, paragraph 2, Article XII of the 1987 Constitution is a self-
executing provision and does not need implementing legislation to carry it
into effect;
2. Assuming 10, paragraph 2, Article XII is self-executing, whether the
controlling shares of the Manila Hotel Corporation form part of our patrimony
as a nation;
3. Whether GSIS is included in the term State, hence, mandated to
implement 10, paragraph 2, Article XII of the Constitution; and
4. Assuming GSIS is part of the State, whether it should give preference to
the petitioner, a Filipino corporation, over Renong Berhad, a foreign
corporation, in the sale of the controlling shares of the Manila Hotel
Corporation.
III. THE RULING
[The Court, voting 11-4, DISMISSED the petition.]
1. YES, 10, paragraph 2, Article XII of the 1987 Constitution is a self-
executing provision and does not need implementing legislation to
carry it into effect.
Sec. 10, second par., of Art XII is couched in such a way as not to make it
appear that it is non-self-executing but simply for purposes of style. But,
certainly, the legislature is not precluded from enacting further laws to
enforce the constitutional provision so long as the contemplated statute
squares with the Constitution. Minor details may be left to the legislature
without impairing the self-executing nature of constitutional provisions.
xxx xxx xxx
Respondents . . . argue that the non-self-executing nature of Sec. 10, second
par., of Art. XII is implied from the tenor of the first and third paragraphs of
the same section which undoubtedly are not self-executing. The argument is
flawed. If the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation and operation
of enterprises fully owned by Filipinos, as in the first paragraph, and the State
still needs legislation to regulate and exercise authority over foreign
investments within its national jurisdiction, as in the third paragraph, then a
fortiori, by the same logic, the second paragraph can only be self-executing
as it does not by its language require any legislation in order to give
preference to qualified Filipinos in the grant of rights, privileges and
concessions covering the national economy and patrimony. A constitutional
provision may be self-executing in one part and non-self-executing in
another.
xxx. Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory,
positive command which is complete in itself and which needs no further
guidelines or implementing laws or rules for its enforcement. From its very
8
words the provision does not require any legislation to put it in operation. It
is per se judicially enforceable. When our Constitution mandates that [i]n the
grant of rights, privileges, and concessions covering national economy and
patrimony, the State shall give preference to qualified Filipinos, it means just
that - qualified Filipinos shall be preferred. And when our Constitution
declares that a right exists in certain specified circumstances an action may
be maintained to enforce such right notwithstanding the absence of any
legislation on the subject; consequently, if there is no statute especially
enacted to enforce such constitutional right, such right enforces itself by its
own inherent potency and puissance, and from which all legislations must
take their bearings. Where there is a right there is a remedy. Ubi jus ibi
remedium.
2. YES, the controlling shares of the Manila Hotel Corporation form
part of our patrimony as a nation.
In its plain and ordinary meaning, the term patrimony pertains to
heritage. When the Constitution speaks of national patrimony, it refers not
only to the natural resources of the Philippines, as the Constitution could
have very well used the term natural resources, but also to the cultural
heritage of the Filipinos.
xxx xxx xxx
For more than eight (8) decades Manila Hotel has bore mute witness to the
triumphs and failures, loves and frustrations of the Filipinos; its existence is
impressed with public interest; its own historicity associated with our struggle
for sovereignty, independence and nationhood. Verily, 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.
3. YES, GSIS is included in the term State, hence, it is mandated to
implement 10, paragraph 2, Article XII of the Constitution.
It is undisputed that the sale of 51% of the MHC could only be carried out
with the prior approval of the State acting through respondent Committee on
Privatization. [T]his fact alone makes the sale of the assets of respondents
GSIS and MHC a state action. In constitutional jurisprudence, the acts of
persons distinct from the government are considered state action covered
by the Constitution (1) when the activity it engages in is a public function;
(2) when the government is so significantly involved with the private actor as
to make the government responsible for his action; and, (3) when the
government has approved or authorized the action. It is evident that the act
of respondent GSIS in selling 51% of its share in respondent MHC comes
under the second and third categories of state action. Without doubt
therefore the transaction, although entered into by respondent GSIS, is in
fact a transaction of the State and therefore subject to the constitutional
command.
When the Constitution addresses the State it refers not only to the people but
also to the government as elements of the State. After all, government is
composed of three (3) divisions of power - legislative, executive and
judicial. Accordingly, a constitutional mandate directed to the State is
correspondingly directed to the three (3) branches of government. It is
undeniable that in this case the subject constitutional injunction is addressed
among others to the Executive Department and respondent GSIS, a
government instrumentality deriving its authority from the State.
4. YES, GSIS should give preference to the petitioner in the sale of the
controlling shares of the Manila Hotel Corporation.
It should be stressed that while the Malaysian firm offered the higher bid it is
not yet the winning bidder. The bidding rules expressly provide that the
highest bidder shall only be declared the winning bidder after it has
negotiated and executed the necessary contracts, and secured the requisite
approvals. Since the Filipino First Policy provision of the Constitution
bestows preference on qualified Filipinos the mere tending of the highest bid
is not an assurance that the highest bidder will be declared the winning
bidder. Resultantly, respondents are not bound to make the award yet, nor
are they under obligation to enter into one with the highest bidder. For in
choosing the awardee respondents are mandated to abide by the dictates of
the 1987 Constitution the provisions of which are presumed to be known to
all the bidders and other interested parties.
xxx xxx xxx
Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this
9
to other Qualified Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest bid in terms of price
per share. Certainly, the constitutional mandate itself is reason enough not to
award the block of shares immediately to the foreign bidder notwithstanding
its submission of a higher, or even the highest, bid. In fact, we cannot
conceive of a stronger reason than the constitutional injunction itself.
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 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. It must be so if we are to give life and
meaning to the Filipino First Policy provision of the 1987 Constitution. For,
while this may neither be expressly stated nor contemplated in the bidding
rules, the constitutional fiat is omnipresent to be simply disregarded. To
ignore it would be to sanction a perilous skirting of the basic law.
La Bugal-BLaan Tribal Association v. Ramos, 445 SCRA 1 (2004)
Facts :
On July 25, 1987, then President Corazon C. Aquino issued Executive Order
(E.O.) No. 2796 authorizing the DENR Secretary to accept, consider and
evaluate proposals from foreign-owned corporations or foreign investors for
contracts or agreements involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals, which, upon
appropriate recommendation of the Secretary, the President may execute
with the foreign proponent.
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942
to "govern the exploration, development, utilization and processing of all
mineral resources." R.A. No. 7942 defines the modes of mineral agreements
for mining operations, outlines the procedure for their filing and approval,
assignment/transfer and withdrawal, and fixes their terms. Similar provisions
govern financial or technical assistance agreements.
On April 9, 1995, 30 days following its publication on March 10, 1995 in
Malaya and Manila Times, two newspapers of general circulation, R.A. No.
7942 took effect. Shortly before the effectivity of R.A. No. 7942, however, or
on March 30, 1995, the President entered into an FTAA with WMCP covering
99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur
and North Cotabato.
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later
repealed by DAO No. 96-40, s. 1996 which was adopted on December 20,
1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR
Secretary demanding that the DENR stop the implementation of R.A. No.
7942 and DAO No. 96-40, giving the DENR fifteen days from receipt to act
thereon. The DENR, however, has yet to respond or act on petitioners' letter.
Petitioners claim that the DENR Secretary acted without or in excess of
jurisdiction.
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for
Financial or Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as
unconstitutional and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine
Mining Act contained in DENR Administrative Order No. 96-40 and all other
similar administrative issuances as unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to
Western Mining Philippines, Inc. as unconstitutional, illegal and null and void.
Issue :
Whether or not Republic Act No. 7942 is unconstitutional.
Ruling :
The Court finds the following provisions of R.A. No. 7942 to be violative of
Section 2, Article XII of the Constitution and hereby declares unconstitutional
and void:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
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.
(2) Section 23, which specifies the rights and obligations of an exploration
permittee, insofar as said section applies to a financial or technical
assistance agreement,
10

(3) Section 33, which prescribes the eligibility of a contractor in a financial or
technical assistance agreement;
(4) Section 35, which enumerates the terms and conditions for every financial
or technical assistance agreement;
(5) Section 39, which allows the contractor in a financial and technical
assistance agreement to convert the same into a mineral production-sharing
agreement;
(6) Section 56, which authorizes the issuance of a mineral processing permit
to a contractor in a financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are
dependent on the foregoing provisions and cannot stand on their own:
(1) Section 3 (g), which defines the term "contractor," insofar as it applies to a
financial or technical assistance agreement.
Section 34, which prescribes the maximum contract area in a financial or
technical assistance agreements;
Section 36, which allows negotiations for financial or technical assistance
agreements;
Section 37, which prescribes the procedure for filing and evaluation of
financial or technical assistance agreement proposals;
Section 38, which limits the term of financial or technical assistance
agreements;
Section 40, which allows the assignment or transfer of financial or technical
assistance agreements;
Section 41, which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81, which provide for the
Government's share in a financial and technical assistance agreement; and
Section 90, which provides for incentives to contractors in FTAAs insofar as it
applies to said contractors;
When the parts of the statute are so mutually dependent and connected as
conditions, considerations, inducements, or compensations for each other,
as to warrant a belief that the legislature intended them as a whole, and that
if all could not be carried into effect, the legislature would not pass the
residue independently, then, if some parts are unconstitutional, all the
provisions which are thus dependent, conditional, or connected, must fall
with them.
WHEREFORE, the petition is GRANTED.
Cruz v. Sec. of DENR, 347 SCRA 128 (2000
FACTS:
Petitioners Isagani Cruz and Cesar Europa filed a suit for prohibition and
mandamus as citizens and taxpayers, assailing the constitutionality of certain
provisions of Republic Act No. 8371, otherwise known as the Indigenous
Peoples Rights Act of 1997 (IPRA) and its implementing rules and
regulations (IRR). The petitioners assail certain provisions of the IPRA and
its IRR on the ground that these amount to an unlawful deprivation of the
States ownership over lands of the public domain as well as minerals and
other natural resources therein, in violation of the regalian doctrine embodied
in section 2, Article XII of the Constitution.
ISSUE:
Do the provisions of IPRA contravene the Constitution?
HELD:
No, the provisions of IPRA do not contravene the Constitution. Examining the
IPRA, there is nothing in the law that grants to the ICCs/IPs ownership over
the natural resources within their ancestral domain. Ownership over the
natural resources in the ancestral domains remains with the State and the
rights granted by the IPRA to the ICCs/IPs over the natural resources in their
ancestral domains merely gives them, as owners and occupants of the land
on which the resources are found, the right to the small scale utilization of
these resources, and at the same time, a priority in their large scale
development and exploitation.
Additionally, ancestral lands and ancestral domains are not part of the lands
of the public domain. They are private lands and belong to the ICCs/IPs by
native title, which is a concept of private land title that existed irrespective of
any royal grant from the State. However, the right of ownership and
possession by the ICCs/IPs of their ancestral domains is a limited form of
ownership and does not include the right to alienate the same.
11
Boy Scouts of the Philippines v. COA, 651 SCRA 146 (2011 BE IT RESOLVED FURTHERMORE, that for purposes of audit
supervision,the Boy Scouts of the
FACTS: Philippines shall be classified among the government corporations belonging
This case arose when the COA issuedResolution No. 99-011on August 19, to the Educational,
1999 ("the COA Social, Scientific, Civic and Research Sectorunder the Corporate Audit Office
Resolution"), with the subject "Defining the Commissions policy with respect I, to be audited, similar
to the audit of the Boy to the subsidiary corporations, by employing the team audit approach
Scouts of the Philippines."In its whereas clauses, the COA Resolution stated ISSUE:
that the BSP was Whether the COA has jurisdiction over the BSP
created as a public corporation under Commonwealth Act No. 111, as HELD:
amended by Presidential Yes
Decree No. 460 and Republic Act No. 7278; that inBoy Scouts of the POLITICAL LAW: Jurisdiction of COA
Philippines v. National Labor After looking at the legislative history of its amended charter and carefully
Relations Commission, the Supreme Court ruled that the BSP, as constituted studying the applicable
under its charter, was a laws and the arguments of both parties, we find that the BSP is a public
"government-controlled corporation within the meaning of Article IX(B)(2)(1) corporation and its funds are
of the Constitution"; and subject to the COAs audit jurisdiction.
that The BSP Charter (Commonwealth Act No. 111, approved on October 31,
"the 1936), entitled "An Act to
BSP Create a Public Corporation to be Known as the Boy Scouts of the
is Philippines, and to Define its
appropriately Powers and Purposes" created the BSP as a "public corporation"
regarded There are three classes of juridical persons under Article 44 of the Civil Code
as and the BSP, as
a presently constituted under Republic Act No. 7278,falls under the second
government classification.Article 44
instrumentality reads:
under Art. 44. The following are juridical persons:
the (1) The State and its political subdivisions;
1987 (2)Other corporations,institutions and entities for public interest or purpose
Administrative Code." The COA Resolution also cited its constitutional created by law; their
mandate under Section 2(1), personality begins as soon as they have been constituted according to law;
Article IX (D).Finally, the COA Resolution reads: (3) Corporations, partnerships and associations forprivate interest or
NOW THEREFORE, in consideration of the foregoing premises, the purposeto which the law grants
COMMISSION PROPER HAS a juridical personality, separate and distinct from that of each shareholder,
RESOLVED, AS IT DOES HEREBY RESOLVE,to conduct an annual partner or member.
financial audit of the Boy
Scouts of the Philippines in accordance with generally accepted auditing
standards, and express an
opinion on whether the financial statements which include the Balance Republic v. Heirs of Maxima Lachica Lim, et. al., G.R. No. 157485, March
Sheet, the Income Statement 26, 2014
and the Statement of Cash Flows present fairly its financial position and
results of operations. Republic v Sin
xxxx G.R. No. 157485, March 16, 2014
12
Facts:
Respondents claim that they are the lawful heirs of the late Maxima
Lachica Sin who was the owner of a parcel of land situated at Barangay
Tambac, New Washington, Aklan. On August 26, 1991, they respondent
heirs instituted in the RTC of Kalibo, Aklan a complaint against Aklan
National College of Fisheries (ANCF) for recovery of possession, quieting of
title, and declaration of ownership with damages claiming that the latter
usurped their rights over the property.
ANCF countered that the subject land was the subject of
Proclamation No. 2074 of then President Ferdinand E. Marcos allocating the
area of said property as civil reservation for educational purposes of ANCF.
The ANCF Superintendent furthermore averred that the subject parcel of
land is timberland and therefore not susceptible of private ownership.
The respondents presented evidence that they inherited a bigger
parcel of land from their mother who acquired it by virtue of a deed of sale.
That in 1988 a potion thereof was occupied by ANCF and converted into a
fishpond for educational purpose. Respondent heirs asserted that they were
previously in possession of the disputed land in the concept of an owner. To
prove possession, respondents presented several tax declarations, the
earliest of which was in the year 1945.
The MCTC, the RTC and the Court of Appeals unanimously held that
respondents retain private rights to the disputed property by virtue of their
and their predecessors open, continuous, exclusive and notorious
possession amounts to an imperfect title, which should be respected and
protected.
Issue: Whether or not the claim of the respondents amounts to judicial
confirmation of imperfect title.
Held:
No. At the outset, it must be noted that respondents have not filed an
application for judicial confirmation of imperfect title under the Public Land
Act or the Property Registration Decree. Section 48(b) of the Public Land Act
and Section 14(1) of the Property Registration Decree provide the requisites
for judicial confirmation of imperfect title: (1) open, continuous, exclusive, and
notorious possession and occupation of the subject land by himself or
through his predecessorsininterest under a bona fide claim of ownership
since time immemorial or from June 12, 1945; and (2) the classification of the
land as alienable and disposable land of the public domain.
Under the Regalian doctrine, which is embodied in our Constitution,
all lands of the public domain belong to the State, which is the source of any
asserted right to any ownership of land. All lands not appearing to be clearly
within private ownership are presumed to belong to the State. Accordingly,
public lands not shown to have been reclassified or released as alienable
agricultural land or alienated to a private person by the State remain part of
the inalienable public domain. Unless public land is shown to have been
reclassified as alienable or disposable to a private person by the State, it
remains part of the inalienable public domain. Property of the public domain
is beyond the commerce of man and not susceptible of private appropriation
and acquisitive prescription. Occupation thereof in the concept of owner no
matter how long cannot ripen into ownership and be registered as a title. The
burden of proof in overcoming the presumption of State ownership of the
lands of the public domain is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application
is alienable or disposable. To overcome this presumption, incontrovertible
evidence must be established that the land subject of the application (or
claim) is alienable or disposable.
There must be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for
registration is alienable, the applicant must establish the existence of a
positive act of the government, such as a presidential proclamation or an
executive order; an administrative action; investigation reports of Bureau of
Lands investigators; and a legislative act or a statute. The applicant may also
secure a certification from the government that the land claimed to have
been possessed for the required number of years is alienable and
disposable.
In the case at bar, it is therefore the respondents which have the
burden to identify a positive act of the government, such as an official
proclamation, declassifying inalienable public land into disposable land for
agricultural or other purposes. Since respondents failed to do so, the alleged
possession by them and by their predecessorsininterest is inconsequential
and could never ripen into ownership. Accordingly, respondents cannot be
considered to have private rights within the purview of Proclamation No.
2074 as to prevent the application of said proclamation to the subject
property.
Narra Nickel Mining Corp., et. al., v. Redmont Consolidated Mines Corp.,
G.R. No. 195580, January 28, 2015
Facts:
Redmont is a domestic corporation interested in the mining and exploration
of some areas in Palawan. Upon learning that those areas were covered by
MPSA applications of other three (allegedly Filipino) corporations Narra,
13
Tesoro, and MacArthur, it filed a petition before the Panel of Arbitrators of
DENR seeking to deny their permits on the ground that these corporations
are in reality foreign-owned. MBMI, a 100% Canadian corporation, owns
40% of the shares of PLMC (which owns 5,997 shares of Narra), 40% of the
shares of MMC (which owns 5,997 shares of McArthur) and 40% of the
shares of SLMC (which, in turn, owns 5,997 shares of Tesoro).
Aside from the MPSA, the three corporations also applied for FTAA with the
Office of the President. In their answer, they countered that (1) the liberal
Control Test must be used in determining the nationality of a corporation as
based on Sec 3 of the Foreign Investment Act which as they claimed
admits of corporate layering schemes, and that (2) the nationality question is
no longer material because of their subsequent application for FTAA.
Commercial / Political Law
Hide
Issue 1: W/N the Grandfather Rule must be applied in this case
Yes. It is the intention of the framers of the Constitution to apply the
Grandfather Rule in cases where corporate layering is present.
First, as a rule in statutory construction, 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. Corporate layering is admittedly allowed by the FIA, but if it is
used to circumvent the Constitution and other pertinent laws, then it becomes
illegal.
Second, under the SEC Rule1 and DOJ Opinion2 , the Grandfather Rule must
be applied when the 60-40 Filipino-foreign equity ownership is in
doubt. Doubt is present in the Filipino equity ownership of Narra, Tesoro,
and MacArthur since their common investor, the 100% Canadian-owned
corporation MBMI, funded them.
Under the Grandfather Rule, it is not enough that the corporation does have
the required 60% Filipino stockholdings at face value. To determine the
percentage of the ultimate Filipino ownership, it must first be traced to the
level of the investing corporation and added to the shares directly owned in
the investee corporation. Applying this rule, it turns out that the Canadian
corporation owns more than 60% of the equity interests of Narra, Tesoro and
MacArthur. Hence, the latter are disqualified to participate in the exploration,
development and utilization of the Philippines natural resources.
1 DOJ Opinion No. 020 Series of 2005 (paragraph 7)
2 SEC Opinion May 13, 1990
Remedial Law
Hide
Issue 2: W/N the case has become moot as a result of the MPSA
conversion to FTAA
No. There are certain exceptions to mootness principle 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.
The SC noted that a grave violation of the Constitution is being committed by
a foreign corporation 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
Countrys 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. 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 corporate layering
and conversion of applications to skirt the constitutional prohibition against
foreign mining in Philippine soil.
Jose M. Roy III v. Hrbosa, G.R. No. 207246, November 22, 2016
G.R. No. 207246, November 22, 2016
JOSE M. ROY III, Petitioner, v. CHAIRPERSON TERESITA HERBOSA, THE
SECURITIES AND EXCHANGE COMMISSION, AND PHILILIPPINE LONG
DISTANCE TELEPHONE COMPANY, Respondents.
FACTS OF THE CASE:
This is a case of special civil action for certiorari under Rule 65 of the
Rules of Court seeking to annul Memorandum Circular No. 8, Series of 2013
(SEC-MC No. 8)issued by the SEC for allegedly being in violation of the
Court's Decision ("Gamboa Decision") and Resolution ("Gamboa
Resolution") in Gamboa v. Finance Secretary Teves, G.R. No. 176579 which
jurisprudentially established the proper interpretation of Section 11, Article XII
of the Constitution.
On June 28, 2011, the Court issued the Gamboa Decision, the
dispositive portion of which reads:
WHEREFORE, we PARTLY GRANT the petition and rule
that the term "capital" in Section 11, Article XII of the 1987
Constitution refers only to shares of stock entitled to vote in
the election of directors, and thus in the present case only to
14
 common shares, and not to the total outstanding capital
stock (common and non-voting preferred shares).
Respondent Chairperson of the Securities and Exchange
Commission is DIRECTED to apply this definition of the term
"capital" in determining the extent of allowable foreign
ownership in respondent Philippine Long Distance
Telephone Company, and if there is a violation of Section 11,
Article XII of the Constitution, to impose the appropriate
sanctions under the law.
On May 20, 2013, the SEC, through Chairperson Herbosa, issued
SEC-MC No. 8 entitled "Guidelines on Compliance with the Filipino-Foreign
Ownership Requirements Prescribed in the Constitution and/or Existing Laws
by Corporations Engaged in Nationalized and Partly Nationalized Activities."
Section 2 of SEC-MC No. 8 provides:
Section 2. All covered corporations shall, at all times,
observe the constitutional or statutory ownership
requirement. For purposes of determining compliance
therewith, the required percentage of Filipino ownership shall
be applied to BOTH (a) the total number of outstanding
shares of stock entitled to vote in the election of directors;
AND (b) the total number of outstanding shares of stock,
whether or not entitled to vote in the election of directors.
On June 10, 2013, Roy, as a lawyer and taxpayer, filed the Petition,
assailing the validity of SEC-MC No. 8 for not conforming to the letter and
spirit of the Gamboa Decision and Resolution and for having been issued by
the SEC with grave abuse of discretion. Petitioner Roy also questions the
ruling of the SEC that respondent Philippine Long Distance Telephone
Company ("PLDT") is compliant with the constitutional rule on foreign
ownership. He prays that the Court declare SEC-MC No. 8 unconstitutional
and direct the SEC to issue new guidelines regarding the determination of
compliance with Section 11, Article XII of the Constitution in accordance with
Gamboa.
ISSUE: Whether the petitioner has standing to question the validity of the
subject act or issuance, i.e., he has a personal and substantial interest in the
case that he has sustained, or will sustain, direct injury as a result of the
enforcement of the act or issuance
RULING:
Petitioners have no legal standing to question the constitutionality of
SEC-MC No. 8. The personal and substantial interest that enables a party to
have legal standing is one that is both material, an interest in issue and to be
affected by the government action, as distinguished from mere interest in the
issue involved, or a mere incidental interest, and real, which means a present
substantial interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest.
As to injury, the party must show that (1) he will personally suffer
some actual or threatened injury because of the allegedly illegal conduct of
the government; (2) the injury is fairly traceable to the challenged action; and
(3) the injury is likely to be redressed by a favorable action.
To establish his standing, petitioner Roy merely claimed that he has
standing to question SEC-MC No. 8 "as a concerned citizen, an officer of the
Court and as a taxpayer" as well as "the senior law partner of his own law
firm[, which] x x x is a subscriber of PLDT."
The Court has previously emphasized that the locus standi requisite
is not met by the expedient invocation of one's citizenship or membership in
the bar who has an interest in ensuring that laws and orders of the Philippine
government are legally and validly issued as these supposed interests are
too general, which are shared by other groups and by the whole citizenry.
Per their allegations, the personal interest invoked by petitioners as citizens
and members of the bar in the validity or invalidity of SEC-MC No. 8 is at
best equivocal, and totally insufficient.
Petitioners' status as taxpayers is also of no moment. As often
reiterated by the Court, a taxpayer's suit is allowed only when the petitioner
has demonstrated the direct correlation of the act complained of and the
disbursement of public funds in contravention of law or the Constitution, or
has shown that the case involves the exercise of the spending or taxing
power of Congress. SEC-MC No. 8 does not involve an additional
expenditure of public funds and the taxing or spending power of Congress.
The allegation that petitioner Roy's law firm is a "subscriber of PLDT"
is ambiguous. It is unclear whether his law firm is a "subscriber" of PLDT's
shares of stock or of its various telecommunication services. Petitioner Roy
has not identified the specific direct and substantial injury he or his law firm
stands to suffer as "subscriber of PLDT" as a result of the issuance of SEC-
MC No. 8 and its enforcement. Moreover, in the most practical sense, a
PLDT subscriber loses or gains nothing in the event that SEC-MC No. 8 is
either sustained or struck down by [the Court].
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