Scribd Logo
Upload

Welcome to Scribd!

  • 5K views

    Narra Nickel Mining Vs Redmont Consolidated

    Uploaded by

    Athena Santos
    The Court of Appeals ruled that three mining corporations (Narra, Tesoro, and McArthur) were foreign corporations based on the "grandfather rule" test. The grandfather rule examines the nationality of not just the corporation directly, but also its corporate owners. It found that MBMI, a 100% Canadian corporation, had over 60% equity ownership in the corporations when considering its ownership through their corporate owners. The Supreme Court affirmed this finding and ruled that the corporations were not considered Filipino under Philippine law since a foreign corporation ultimately had majority control over them through corporate layering. It held that both the control test and grandfather rule can be used to determine nationality when there is doubt about the 60-40 ownership requirement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Narra Nickel Mining Vs Redmont Consolidated

    Uploaded by

    Athena Santos
    5K views2 pages
    The Court of Appeals ruled that three mining corporations (Narra, Tesoro, and McArthur) were foreign corporations based on the "grandfather rule" test. The grandfather rule examines the nationality of not just the corporation directly, but also its corporate owners. It found that MBMI, a 100% Canadian corporation, had over 60% equity ownership in the corporations when considering its ownership through their corporate owners. The Supreme Court affirmed this finding and ruled that the corporations were not considered Filipino under Philippine law since a foreign corporation ultimately had majority control over them through corporate layering. It held that both the control test and grandfather rule can be used to determine nationality when there is doubt about the 60-40 ownership requirement.

    Original Description:

    corpo

    Original Title

    Narra Nickel Mining vs Redmont Consolidated

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Court of Appeals ruled that three mining corporations (Narra, Tesoro, and McArthur) were foreign corporations based on the "grandfather rule" test. The grandfather rule examines the nationality of not just the corporation directly, but also its corporate owners. It found that MBMI, a 100% Canadian corporation, had over 60% equity ownership in the corporations when considering its ownership through their corporate owners. The Supreme Court affirmed this finding and ruled that the corporations were not considered Filipino under Philippine law since a foreign corporation ultimately had majority control over them through corporate layering. It held that both the control test and grandfather rule can be used to determine nationality when there is doubt about the 60-40 ownership requirement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    5K views2 pages

    Narra Nickel Mining Vs Redmont Consolidated

    Uploaded by

    Athena Santos
    The Court of Appeals ruled that three mining corporations (Narra, Tesoro, and McArthur) were foreign corporations based on the "grandfather rule" test. The grandfather rule examines the nationality of not just the corporation directly, but also its corporate owners. It found that MBMI, a 100% Canadian corporation, had over 60% equity ownership in the corporations when considering its ownership through their corporate owners. The Supreme Court affirmed this finding and ruled that the corporations were not considered Filipino under Philippine law since a foreign corporation ultimately had majority control over them through corporate layering. It held that both the control test and grandfather rule can be used to determine nationality when there is doubt about the 60-40 ownership requirement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    1

    G.R. No. 195580 April 21, 2014


    NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and
    MCARTHUR MINING, INC., Petitioners, vs. REDMONT CONSOLIDATED MINES CORP., Respondent.

    FACTS:
    Sometime in December 2006, respondent Redmont Consolidated Mines Corp. (Redmont), a
    domestic corporation organized and existing under Philippine laws, took interest in mining and exploring
    certain areas of the province of Palawan. After inquiring with the Department of Environment and Natural
    Resources (DENR), it learned that the areas where it wanted to undertake exploration and mining
    activities where already covered by Mineral Production Sharing Agreement (MPSA) applications of
    petitioners Narra, Tesoro and McArthur.

    Petitioner McArthur Narra and Tesoro, filed an application for an MPSA and Exploration Permit
    (EP) which was subsequently issued.

    On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3)
    separate petitions for the denial of petitioners applications for MPSA.

    Redmont alleged that at least 60% of the capital stock of McArthur, Tesoro and Narra are owned
    and controlled by MBMI Resources, Inc. (MBMI), a 100% Canadian corporation. Redmont reasoned that
    since MBMI is a considerable stockholder of petitioners, it was the driving force behind petitioners filing
    of the MPSAs over the areas covered by applications since it knows that it can only participate in mining
    activities through corporations which are deemed Filipino citizens. Redmont argued that given that
    petitioners capital stocks were mostly owned by MBMI, they were likewise disqualified from engaging in
    mining activities through MPSAs, which are reserved only for Filipino citizens.

    Petitioners averred that they were qualified persons under Section 3(aq) of Republic Act No. (RA)
    7942 or the Philippine Mining Act of 1995. They stated that their nationality as applicants is immaterial
    because they also applied for Financial or Technical Assistance Agreements (FTAA) denominated as AFTA-
    IVB-09 for McArthur, AFTA-IVB-08 for Tesoro and AFTA-IVB-07 for Narra, which are granted to foreign-
    owned corporations. Nevertheless, they claimed that the issue on nationality should not be raised since
    McArthur, Tesoro and Narra are in fact Philippine Nationals as 60% of their capital is owned by citizens of
    the Philippines.

    On December 14, 2007, the POA issued a Resolution disqualifying petitioners from gaining
    MPSAs. The POA considered petitioners as foreign corporations being "effectively controlled" by MBMI, a
    100% Canadian company and declared their MPSAs null and void.

    Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a
    Complaint with the Securities and Exchange Commission (SEC), seeking the revocation of the certificates
    for registration of petitioners on the ground that they are foreign-owned or controlled corporations
    engaged in mining in violation of Philippine laws.

    CA found that there was doubt as to the nationality of petitioners when it realized that
    petitioners had a common major investor, MBMI, a corporation composed of 100% Canadians. Pursuant
    to the first sentence of paragraph 7 of Department of Justice (DOJ) Opinion No. 020, Series of 2005,
    adopting the 1967 SEC Rules which implemented the requirement of the Constitution and other laws
    pertaining to the exploitation of natural resources, the CA used the "grandfather rule" to determine the
    nationality of petitioners.
    2
    In determining the nationality of petitioners, the CA looked into their corporate structures and
    their corresponding common shareholders. Using the grandfather rule, the CA discovered that MBMI in
    effect owned majority of the common stocks of the petitioners as well as at least 60% equity interest of
    other majority shareholders of petitioners through joint venture agreements. The CA found that
    through a "web of corporate layering, it is clear that one common controlling investor in all mining
    corporations involved x x x is MBMI."

    Thus, it concluded that petitioners McArthur, Tesoro and Narra
    are also in partnership with, or privies-in-interest of, MBMI.

    ISSUE:
    Whether or not the Court of Appeals ruling that Narra, Tesoro and McArthur are foreign
    corporations based on the "Grandfather Rule" is contrary to law, particularly the express mandate of the
    Foreign Investments Act of 1991, as amended, and the FIA Rules.

    HELD:
    No. There are two acknowledged tests in determining the nationality of a corporation: the
    control test and the grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopting the
    1967 SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the
    controlling interests in enterprises engaged in the exploitation of natural resources owned by Filipino
    citizens, provides:
    Shares belonging to corporations or partnerships at least 60% of the capital of which is
    owned by Filipino citizens shall be considered as of Philippine nationality (CONTROL TEST), but if
    the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the
    number of shares corresponding to such percentage shall be counted as of Philippine nationality
    (GRANDFATHER RULE). Thus, if 100,000 shares are registered in the name of a corporation or
    partnership at least 60% of the capital stock or capital, respectively, of which belong to Filipino
    citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
    50% of the capital stock or capital of the corporation or partnership, respectively, belongs to
    Filipino citizens, only 50,000 shares shall be counted as owned by Filipinos and the other 50,000
    shall be recorded as belonging to aliens.

    The 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 courts 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.

    SC disagreed. "Corporate layering" is admittedly allowed by the FIA; but if it is used to circumvent
    the Constitution and pertinent laws, then it becomes illegal. Further, the pronouncement of petitioners
    that the grandfather rule has already been abandoned must be discredited for lack of basis.

    Petitioners McArthur, Tesoro and Narra are not Filipino since MBMI, a 100% Canadian
    corporation, owns 60% or more of their equity interests. Such conclusion is derived from grandfathering
    petitioners corporate owners, namely: MMI, SMMI and PLMDC. The "control test" is still the prevailing
    mode of determining whether or not a corporation is a Filipino corporation, within the ambit of Sec. 2,
    Art. II of the 1987 Constitution, entitled to undertake the exploration, development and utilization of the
    natural resources of the Philippines. When in the mind of the Court there is doubt, based on the
    attendant facts and circumstances of the case, in the 60-40 Filipino-equity ownership in the corporation,
    then it may apply the "grandfather rule."

    You might also like