G.R. No. 210760, January 26, 2015 Kyle Anthony Zabala, Petitioner, V. People of The Philippines, Respondent. Decision Velasco JR., J.: The Case

G.R. No.
210760, January 26, 2015
KYLE ANTHONY ZABALA, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
VELASCO JR., J.:
The Case
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking the reversal of the July 15, 2013 Decision of the Court of Appeals (CA) and its
January 8, 2014 Resolution in CA-G.R. CR No. 34428, entitled People of the Philippines v.
Kyle Anthony Zabala. The assailed CA Decision affirmed the July 7, 2011 Judgment in Crim.
Case No. 1676-M-2008 of the Regional Trial Court (RTC), Branch 22, Malolos City, finding
petitioner guilty beyond reasonable doubt of the crime of theft, punishable under Articles
308 and 309 of the Revised Penal Code. The assailed Resolution, meanwhile, denied
petitioners Motion for Reconsideration.cralawred
The Facts
An Information was filed against petitioner Kyle Anthony Zabala (Zabala) before the RTC,
Branch 22, Malolos City, charging him with theft, the pertinent text of which
states:chanroblesvirtuallawlibrary
That on or about the 18th day of June 2007 in San Jose del Monte City, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused,
with intent to gain and without the knowledge and consent of the owner thereof, did then
and there willfully, unlawfully and feloniously take, steal and carry away with him, one
envelope containing cash amounting to SIXTY EIGHT THOUSAND PESOS (PhP68,000.00)
belonging to Randolph V. Alas, to the damage and prejudice of the said owner in the amount
of PhP68,000.00.
Contrary to law.1
When arraigned, petitioner pleaded not guilty. Trial on the merits ensued. During the trial,
the prosecution presented the testimonies of the complaining witness, Randolph Alas (Alas),
and petitioners alleged former girlfriend, Marlyn Pion (Pion). On the other hand, the
defense presented the testimonies of petitioner and of one Muriel John Ganas (Ganas), his
alleged companion on the day that the incident took place.2chanRoblesvirtualLawlibrary
Version of the Prosecution
The evidence for the prosecution tends to establish that Zabala is a jeepney driver who
earns Two Hundred Pesos (P200) to Four Hundred Pesos (P400) per day on an alternate day
basis. Complainant Alas, meanwhile, works at the Manila City Hall. It is through this job that
he was able to save the Sixty-Eight Thousand Pesos (P68,000) stolen by Zabala.3 Pion, on
the other hand, had been the girlfriend of Zabala for about five months when the incident
pertinent to this case occurred.
Alas testified that he and Zabala were neighbors in San Jose Del Monte City, Bulacan. As
neighbors, he had treated Zabala as his kumpare and would often invite the latter to
drinking sessions inside his house. At times, he would also call Zabala to repair his vehicle,
because Zabala is also a mechanic. He would allow Zabala to follow him to his bedroom to
get cash whenever spare parts are to be bought for the repair of his
vehicle.4chanRoblesvirtualLawlibrary
Alas further testified that on June 18, 2007, at about 4:00 in the morning, he left his house
to go to work. When he returned from work, at around 11:00 in the evening, he discovered
that his money amounting to Sixty Eight Thousand Pesos (P68,000), which he kept in an
envelope inside his closet, was missing.5 During that time, there were only five (5) persons
living in their house: Alas, his parents, his nine (9) year-old son, and his aunt. He asked his
parents and aunt if they knew where he kept his money, but they did not
know.6chanRoblesvirtualLawlibrary
Witness Pion, on the other hand, testified that in the early morning of June 18, 2007, she
and Zabala, her boyfriend at the time, were together at a store owned by the latter, which
was six to seven steps away from the complainants house. She then saw Zabala climb the
fence and scale the tree in front of the complainants house, and enter the house. When he
returned, she noticed that he had a bulge in his pocket, which she later found to be a
plentiful sum of money. Zabala then brought her home, and agreed to meet her again at
about 10:00 in the morning. They then went to Greenhills, where Zabala bought two Nokia
mobile phones, which cost about Eight Thousand Five Hundred Pesos
(P8,500).7chanRoblesvirtualLawlibrary
Version of the Defense
For his defense, Zabala testified that in the early morning of June 17, 2007, he was driving
his passenger jeepney, together with his friend, witness Ganas. They parted ways at around
6:00 in the morning of the following day. During the whole time they were together, they
did not drop by the house of the private complainant. Neither did he have the time to meet
Marilyn Pion, of whom he regarded only as an acquaintance and not his
girlfriend.8chanRoblesvirtualLawlibrary
Witness Ganas corroborated the declaration of Zabala. He testified that he was with
petitioner, acting as the conductor, while petitioner was plying the route of his driven
jeepney. He had known petitioner since his childhood, and was his good
friend.9chanRoblesvirtualLawlibrary
Ruling of the RTC
On July 7, 2011, the RTC rendered its Judgment convicting petitioner of the offense
charged. The dispositive portion of the RTC Decision reads:chanroblesvirtuallawlibrary
WHEREFORE, finding guilt of the accused beyond reasonable doubt, judgment is hereby
rendered in Criminal Case No. 1676-M-2008 CONVICTING accused KYLE ANTHONY ZABALA
with the crime of theft defined and penalized under the provisions of Article 308 and 309 of
the Revised Penal Code and is hereby [sentenced] to suffer imprisonment of, applying the
Indeterminate Sentence Law, the MINIMUM penalty of prision correccionalwhich is 6 years,
to a MAXIMUM penalty of prision mayor in its maximum period [of] 8 years.
Accused Zabala is likewise ordered to indemnify and pay the amount of sixty eight thousand
pesos (Php68,000.00) to complaining witness Randolph V. Alas by way of reparation of the
damage caused on him.
Furnish both the public prosecutor and defense counsel of this judgment including the
accused.10
Aggrieved by the Judgment, petitioner appealed to the CA, attributing to the lower court the
following errors: (1) there was a grave error in not giving credence to petitioners version;
(2) petitioner was convicted of the crime charged despite the failure of the prosecution to
prove his guilt beyond reasonable doubt; and (3) petitioner cannot be convicted based on
circumstantial evidence.cralawred
Ruling of the CA
In its presently assailed Decision promulgated on July 15, 2013, the CA denied the appeal
and affirmed the decision of the trial court, but with modification as to the penalty to be
imposed upon petitioner. The CA ruled that the prosecution was able to prove beyond
reasonable doubt the guilt of the appellant through circumstantial evidence.
Citing People v. Modesto,11 the CA said:chanroblesvirtuallawlibrary
x x x [T]he doctrine on circumstantial evidence has been recognized as part of the legal
tradition when it was declared that a rule of ancient respectability so molded into tradition
is that circumstantial evidence suffices to convict only if the following requisites concur:
first, there is more than one circumstance; second, the facts from which the inferences are
derived are proven; and finally, the combination of all the circumstances is such as to
produce a conviction beyond reasonable doubt.12
The CA then found that the series of circumstances present in this case supports a
conviction, and constitutes the basis for a reasonable inference of the existence of the facts
thereby sought to be proved.13chanRoblesvirtualLawlibrary
Rejecting the defense of petitioner, the CA ruled that he offered no evidence other than an
alibi to exculpate him from the crime charged. It then cited the rule that alibi is a weak
defense, and cannot prevail over the positive testimony of a truthful
witness.14chanRoblesvirtualLawlibrary
The CA disposed of petitioners appeal as follows:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the appeal is DENIED. The assailed decision is

AFFIRMED with MODIFICATION. As modified, accused-appellant is sentenced to six (6) years
of prision correccional as minimum to twelve (12) years, eight (8) months and eight (8)
days of reclusion temporal as maximum.
Accused Zabala is likewise [ordered to] indemnify and pay the amount of Sixty Eight
Thousand Pesos (Php68,000.00) to complaining witness Randolph V. Alas by way of
reparation of the damage caused on him.15
Petitioner moved for reconsideration, but in its assailed Resolution dated January 8, 2014,
the CA denied it.
Thus, the present recourse before this Court. Petitioner now argues that there is no
sufficient evidence on record to support his conviction for the charge of theft.
In its Comment, respondent People insists that the prosecution was able to establish
petitioners guilt beyond a reasonable doubt. It argues that the CA correctly ruled that the
series of circumstances presented before the trial court is sufficient to support a
conviction.16chanRoblesvirtualLawlibrary
The Issues
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PETITIONERS

CONVICTION BY GIVING FULL WEIGHT AND CREDENCE TO THE PROSECUTION WITNESSES
TESTIMONIES.cralawred
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF

THE REGIONAL TRIAL COURT DESPITE THE FACT THAT THE EVIDENCE ON RECORD FAILED
TO SUPPORT A CONVICTION.17
In fine, petitioner alleges that the evidence presented before the trial court is insufficient to
convict him of the offense charged.cralawred
The Courts Ruling
We reverse the findings of the RTC and the CA. We agree with petitioner, and find that the
evidence presented below does not constitute proof beyond a reasonable doubt, sufficient to
convict petitioner of theft. Thus, he must be acquitted.
Discussion
Given that the case for the prosecution is largely based on circumstantial evidence, a short
discussion on the sufficiency of circumstantial evidence to convict an accused is in order.
Circumstantial evidence as basis for conviction
It is a settled rule that circumstantial evidence is sufficient to support a conviction, and that
direct evidence is not always necessary. This is but a recognition of the reality that in certain
instances, due to the inherent attempt to conceal a crime, it is not always possible to obtain
direct evidence. InBacolod v. People, this Court had the occasion to
say:chanroblesvirtuallawlibrary
The lack or absence of direct evidence does not necessarily mean that the guilt of the
accused cannot be proved by evidence other than direct evidence. Direct evidence is not the
sole means of establishing guilt beyond reasonable doubt, because circumstantial evidence,
if sufficient, can supplant the absence of direct evidence. The crime charged may also be
proved by circumstantial evidence, sometimes referred to as indirect or presumptive
evidence. Circumstantial evidence has been defined as that which goes to prove a fact or
series of facts other than the facts in issue, which, if proved, may tend by inference to
establish a fact in issue.18
The Rules of Court itself recognizes that circumstantial evidence is sufficient for conviction,
under certain circumstances:chanroblesvirtuallawlibrary
Sec. 4. Circumstantial evidence, when sufficient. Circumstantial evidence is sufficient for
conviction if:ChanRoblesVirtualawlibrary
(1) There is more than one circumstance;
(2) The facts from which the inferences are derived are proven;
(3) The combination of all the circumstances is such as to produce a conviction beyond a
reasonable doubt.
Moreover, in Lozano v. People, this Court clarified the application of the circumstantial
evidence rule:chanroblesvirtuallawlibrary
To sustain a conviction based on circumstantial evidence, it is essential that the

circumstantial evidence presented must constitute an unbroken chain which leads one to
a fair and reasonable conclusion pointing to the accused, to the exclusion of the
others, as the guilty person. The circumstantial evidence must exclude the
possibility that some other person has committed the crime.19 (emphasis in the
original)
The prosecution failed to establish, by circumstantial

evidence, that petitioner is guilty of theft
Unfortunately, in the case at bar, this Court finds that the prosecution failed to present
sufficient circumstantial evidence to convict the petitioner of the offense charged. We find
that the pieces of evidence presented before the trial court fail to provide a sufficient
combination of circumstances, as to produce a conviction beyond reasonable doubt.
To recall, the evidence of the prosecution purports to establish the following narrative: first,
that the complaining witness Alas hides P68,000 in cash in his closet inside their
house; second, that petitioner is aware that Alas hides money in his bedroom
closet; third, that on the night of the incident, petitioner was with his then girlfriend,
witness Pion; fourth, that petitioner climbed through the fence of Alass house, and was
able to successfully gain entrance to his house; fifth, that petitioner later went out of the
house with a bulge in his pockets; and sixth, that later that day, petitioner and Pion went
shopping for a cellphone.
The foregoing narrationbased on the testimonies of the two witnesses of the prosecution,
even if given full faith and credit and considered as established factsfails to establish that
petitioner committed the crime of theft. If at all, it may possibly constitute evidence that
petitioner committed an offense, but not necessarily theft.
In the case before the Court, the evidence presented by the prosecution fails to establish
the corpus delicti of theft. In Tan v. People, this Court said:chanroblesvirtuallawlibrary
Corpus delicti means the body or substance of the crime, and, in its primary sense, refers
to the fact that the crime has been actually committed. The essential elements of theft are
(1) the taking of personal property; (2) the property belongs to another; (3) the taking
away was done with intent of gain; (4) the taking away was done without the consent of the
owner; and (5) the taking away is accomplished without violence or intimidation against
persons or force upon things. In theft, corpus delicti has two elements, namely: (1) that
the property was lost by the owner, and (2) that it was lost by felonious taking. 20
First, nobody saw Zabala enter the bedroom of Alas, where the money amounting to
P68,000 was allegedly kept and hidden. It is interesting to note that while Alas testified that
there were other persons living in that house, i.e. his family members, the prosecution
failed to put any of them on the witness stand, to testify that they saw or heard something
out of the ordinary at the time the incident allegedly took place, or to explain why nobody
else was able to notice that the theft took place while Alas was absent. Witness Pion,
meanwhile, merely testified that she saw Zabala scale the fence of Alas house and enter it.
She did not actually see Zabala enter the room of Alas, where the money was hidden.
Second, the evidence presented below is insufficient to determine without a reasonable

doubt that the P68,000 in cash was lost due to felonious taking, and, more importantly, that
it was petitioner who committed the felonious taking. Even if believed in its entirety, the
testimony of witness Pion does not show that when petitioner left the house of Alas, he
was carrying the P68,000 in cash which was supposedly lost. All that Pion saw was the
bulge in petitioners pockets. Pions testimony can hardly be considered as evidence to
prove that when petitioner entered the house of Alas, he did so because of his intent to
commit asportation.
Third, Pions testimony fails to establish that Alas pocket indeed contained the stolen
money, as she never actually saw what was inside the pocket of Zabala. While she testified
that later that day, they went to buy a cellphone amounting to P8,500, she failed to testify
whether the money that Zabala used in paying for the cellphone was retrieved from the very
same bulging pocket which she saw earlier in the day, which would have led to the
conclusion that Zabalas pocket contained money. Failing this, what is left is the fact that
Pion saw a bulge in Zabalas pocket, and there is no evidence whatsoever to prove that his
pocket in fact was used to hide the money that he allegedly stole. The trial and appellate
courts committed error in accepting as fact that Zabalas pocket contained money, when
there is a dearth of evidence to support such allegation.
And fourth, the rule in circumstantial evidence cases is that the evidence must exclude the
possibility that some other person committed the crime.21 In the case here, however, the
prosecution failed to prove, or even allege, that it was impossible for some other person to
have committed the crime of theft against Alas. The prosecution failed to adduce evidence
that at the time the theft was committed, there was no other person inside the house of
Alas, or that no other person could have taken the money from the closet of Alas. Alas
himself admitted that there were other residents in the house, but these persons were
never presented to prove their whereabouts at the time the incident took place. This failure
of the prosecution leads the Court to no other conclusion but that they failed to establish
that culpability could only belong to Zabala, and not to some other person.
Given the foregoing discussion, We find that petitioner was wrongfully convicted of theft. In
the absence of proof beyond a reasonable doubt, the presumption of innocence must be
upheld, and thus, petitioner should be acquitted.
WHEREFORE, this petition is GRANTED. Accordingly, the July 15, 2013 Decision of the
Court of Appeals and its January 8, 2014 Resolution in CA-G.R. CR No. 34428 are
hereby REVERSED and SET ASIDE. Petitioner Kyle Anthony Zabala is ACQUITTED of the
offense of theft, on account of reasonable doubt. No costs.
G.R. No. 195580 April 21, 2014
NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC.,
and MCARTHUR MINING, INC., Petitioners,
vs.
REDMONT CONSOLIDATED MINES CORP., Respondent.
DECISION
VELASCO, JR., J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra Nickel and Mining
Development Corp. (Narra), Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining Inc.
(McArthur), which seeks to reverse the October 1, 2010 Decision 1 and the February 15, 2011 Resolution
of the Court of Appeals (CA).
The Facts
Sometime in December 2006, respondent Redmont Consolidated Mines Corp. (Redmont), a domestic
corporation organized and existing under Philippine laws, took interest in mining and exploring certain
areas of the province of Palawan. After inquiring with the Department of Environment and Natural
Resources (DENR), it learned that the areas where it wanted to undertake exploration and mining
activities where already covered by Mineral Production Sharing Agreement (MPSA) applications of
petitioners Narra, Tesoro and McArthur.
Petitioner McArthur, through its predecessor-in-interest Sara Marie Mining, Inc. (SMMI), filed an
application for an MPSA and Exploration Permit (EP) with the Mines and Geo-Sciences Bureau (MGB),
Region IV-B, Office of the Department of Environment and Natural Resources (DENR).
Subsequently, SMMI was issued MPSA-AMA-IVB-153 covering an area of over 1,782 hectares in
Barangay Sumbiling, Municipality of Bataraza, Province of Palawan and EPA-IVB-44 which includes an
area of 3,720 hectares in Barangay Malatagao, Bataraza, Palawan. The MPSA and EP were then
transferred to Madridejos Mining Corporation (MMC) and, on November 6, 2006, assigned to petitioner
McArthur.2
Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation and Patricia
Louise Mining & Development Corporation (PLMDC) which previously filed an application for an MPSA
with the MGB, Region IV-B, DENR on January 6, 1992. Through the said application, the DENR issued
MPSA-IV-1-12 covering an area of 3.277 hectares in barangays Calategas and San Isidro, Municipality of
Narra, Palawan. Subsequently, PLMDC conveyed, transferred and/or assigned its rights and interests
over the MPSA application in favor of Narra.
Another MPSA application of SMMI was filed with the DENR Region IV-B, labeled as MPSA-AMA-IVB-
154 (formerly EPA-IVB-47) over 3,402 hectares in Barangays Malinao and Princesa Urduja, Municipality
of Narra, Province of Palawan. SMMI subsequently conveyed, transferred and assigned its rights and
interest over the said MPSA application to Tesoro.
On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3) separate
petitions for the denial of petitioners applications for MPSA designated as AMA-IVB-153, AMA-IVB-154
and MPSA IV-1-12.
In the petitions, Redmont alleged that at least 60% of the capital stock of McArthur, Tesoro and Narra are
owned and controlled by MBMI Resources, Inc. (MBMI), a 100% Canadian corporation. Redmont
reasoned that since MBMI is a considerable stockholder of petitioners, it was the driving force behind
petitioners filing of the MPSAs over the areas covered by applications since it knows that it can only
participate in mining activities through corporations which are deemed Filipino citizens. Redmont argued
that given that petitioners capital stocks were mostly owned by MBMI, they were likewise disqualified
from engaging in mining activities through MPSAs, which are reserved only for Filipino citizens.
In their Answers, petitioners averred that they were qualified persons under Section 3(aq) of Republic Act
No. (RA) 7942 or the Philippine Mining Act of 1995 which provided:
Sec. 3 Definition of Terms. As used in and for purposes of this Act, the following terms, whether in singular
or plural, shall mean:
xxxx
(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation,
partnership, association, or cooperative organized or authorized for the purpose of engaging in mining,
with technical and financial capability to undertake mineral resources development and duly registered in
accordance with law at least sixty per cent (60%) of the capital of which is owned by citizens of the
Philippines: Provided, That a legally organized foreign-owned corporation shall be deemed a qualified
person for purposes of granting an exploration permit, financial or technical assistance agreement or
mineral processing permit.
Additionally, they stated that their nationality as applicants is immaterial because they also applied for
Financial or Technical Assistance Agreements (FTAA) denominated as AFTA-IVB-09 for McArthur, AFTA-
IVB-08 for Tesoro and AFTA-IVB-07 for Narra, which are granted to foreign-owned corporations.
Nevertheless, they claimed that the issue on nationality should not be raised since McArthur, Tesoro and
Narra are in fact Philippine Nationals as 60% of their capital is owned by citizens of the Philippines. They
asserted that though MBMI owns 40% of the shares of PLMC (which owns 5,997 shares of Narra), 3 40%
of the shares of MMC (which owns 5,997 shares of McArthur) 4and 40% of the shares of SLMC (which, in
turn, owns 5,997 shares of Tesoro),5 the shares of MBMI will not make it the owner of at least 60% of the
capital stock of each of petitioners. They added that the best tool used in determining the nationality of a
corporation is the "control test," embodied in Sec. 3 of RA 7042 or the Foreign Investments Act of 1991.
They also claimed that the POA of DENR did not have jurisdiction over the issues in Redmonts petition
since they are not enumerated in Sec. 77 of RA 7942. Finally, they stressed that Redmont has no
personality to sue them because it has no pending claim or application over the areas applied for by
petitioners.
On December 14, 2007, the POA issued a Resolution disqualifying petitioners from gaining MPSAs. It
held:
[I]t is clearly established that respondents are not qualified applicants to engage in mining activities. On
the other hand, [Redmont] having filed its own applications for an EPA over the areas earlier covered by
the MPSA application of respondents may be considered if and when they are qualified under the law.
The violation of the requirements for the issuance and/or grant of permits over mining areas is clearly
established thus, there is reason to believe that the cancellation and/or revocation of permits already
issued under the premises is in order and open the areas covered to other qualified applicants.
xxxx
WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur Mining Inc., Tesoro Mining and
Development, Inc., and Narra Nickel Mining and Development Corp. as, DISQUALIFIED for being
considered as Foreign Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby x x
x DECLARED NULL AND VOID.6
The POA considered petitioners as foreign corporations being "effectively controlled" by MBMI, a 100%
Canadian company and declared their MPSAs null and void. In the same Resolution, it gave due course
to Redmonts EPAs. Thereafter, on February 7, 2008, the POA issued an Order 7 denying the Motion for
Reconsideration filed by petitioners.
Aggrieved by the Resolution and Order of the POA, McArthur and Tesoro filed a joint Notice of
Appeal8 and Memorandum of Appeal9 with the Mines Adjudication Board (MAB) while Narra separately
filed its Notice of Appeal10 and Memorandum of Appeal.11
In their respective memorandum, petitioners emphasized that they are qualified persons under the law.
Also, through a letter, they informed the MAB that they had their individual MPSA applications converted
to FTAAs. McArthurs FTAA was denominated as AFTA-IVB-0912 on May 2007, while Tesoros MPSA
application was converted to AFTA-IVB-0813 on May 28, 2007, and Narras FTAA was converted to AFTA-
IVB-0714 on March 30, 2006.
Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a Complaint 15 with
the Securities and Exchange Commission (SEC), seeking the revocation of the certificates for registration
of petitioners on the ground that they are foreign-owned or controlled corporations engaged in mining in
violation of Philippine laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and Motion
to Suspend Proceeding before the MAB praying for the suspension of the proceedings on the appeals
filed by McArthur, Tesoro and Narra.
Subsequently, on September 8, 2008, Redmont filed before the Regional Trial Court of Quezon City,
Branch 92 (RTC) a Complaint16 for injunction with application for issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 08-63379. Redmont prayed
for the deferral of the MAB proceedings pending the resolution of the Complaint before the SEC.
But before the RTC can resolve Redmonts Complaint and applications for injunctive reliefs, the MAB
issued an Order on September 10, 2008, finding the appeal meritorious. It held:
WHEREFORE, in view of the foregoing, the Mines Adjudication Board hereby REVERSES and SETS
ASIDE the Resolution dated 14 December 2007 of the Panel of Arbitrators of Region IV-B (MIMAROPA)
in POA-DENR Case Nos. 2001-01, 2007-02 and 2007-03, and its Order dated 07 February 2008 denying
the Motions for Reconsideration of the Appellants. The Petition filed by Redmont Consolidated Mines
Corporation on 02 January 2007 is hereby ordered DISMISSED. 17
Belatedly, on September 16, 2008, the RTC issued an Order18 granting Redmonts application for a TRO
and setting the case for hearing the prayer for the issuance of a writ of preliminary injunction on
September 19, 2008.
Meanwhile, on September 22, 2008, Redmont filed a Motion for Reconsideration 19 of the September 10,
2008 Order of the MAB. Subsequently, it filed a Supplemental Motion for Reconsideration 20 on September
29, 2008.
Before the MAB could resolve Redmonts Motion for Reconsideration and Supplemental Motion for
Reconsideration, Redmont filed before the RTC a Supplemental Complaint 21 in Civil Case No. 08-63379.
On October 6, 2008, the RTC issued an Order22 granting the issuance of a writ of preliminary injunction
enjoining the MAB from finally disposing of the appeals of petitioners and from resolving Redmonts
Motion for Reconsideration and Supplement Motion for Reconsideration of the MABs September 10,
2008 Resolution.
On July 1, 2009, however, the MAB issued a second Order denying Redmonts Motion for
Reconsideration and Supplemental Motion for Reconsideration and resolving the appeals filed by
petitioners.
Hence, the petition for review filed by Redmont before the CA, assailing the Orders issued by the MAB.
On October 1, 2010, the CA rendered a Decision, the dispositive of which reads:
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders, dated September 10, 2008
and July 1, 2009 of the Mining Adjudication Board are reversed and set aside. The findings of the Panel of
Arbitrators of the Department of Environment and Natural Resources that respondents McArthur, Tesoro
and Narra are foreign corporations is upheld and, therefore, the rejection of their applications for Mineral
Product Sharing Agreement should be recommended to the Secretary of the DENR.
With respect to the applications of respondents McArthur, Tesoro and Narra for Financial or Technical
Assistance Agreement (FTAA) or conversion of their MPSA applications to FTAA, the matter for its
rejection or approval is left for determination by the Secretary of the DENR and the President of the
Republic of the Philippines.
SO ORDERED.23
In a Resolution dated February 15, 2011, the CA denied the Motion for Reconsideration filed by
petitioners.
After a careful review of the records, the CA found that there was doubt as to the nationality of petitioners
when it realized that petitioners had a common major investor, MBMI, a corporation composed of 100%
Canadians. Pursuant to the first sentence of paragraph 7 of Department of Justice (DOJ) Opinion No.
020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement of the
Constitution and other laws pertaining to the exploitation of natural resources, the CA used the
"grandfather rule" to determine the nationality of petitioners. It provided:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage
shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a
corporation or partnership at least 60% of the capital stock or capital, respectively, of which belong to
Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino
citizens, only 50,000 shares shall be recorded as belonging to aliens. 24 (emphasis supplied)
In determining the nationality of petitioners, the CA looked into their corporate structures and their
corresponding common shareholders. Using the grandfather rule, the CA discovered that MBMI in effect
owned majority of the common stocks of the petitioners as well as at least 60% equity interest of other
majority shareholders of petitioners through joint venture agreements. The CA found that through a "web
of corporate layering, it is clear that one common controlling investor in all mining corporations involved x
x x is MBMI."25 Thus, it concluded that petitioners McArthur, Tesoro and Narra are also in partnership with,
or privies-in-interest of, MBMI.
Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into FTAA applications
suspicious in nature and, as a consequence, it recommended the rejection of petitioners MPSA
applications by the Secretary of the DENR.
With regard to the settlement of disputes over rights to mining areas, the CA pointed out that the POA has
jurisdiction over them and that it also has the power to determine the of nationality of petitioners as a
prerequisite of the Constitution prior the conferring of rights to "co-production, joint venture or production-
sharing agreements" of the state to mining rights. However, it also stated that the POAs jurisdiction is
limited only to the resolution of the dispute and not on the approval or rejection of the MPSAs. It stipulated
that only the Secretary of the DENR is vested with the power to approve or reject applications for MPSA.
Finally, the CA upheld the findings of the POA in its December 14, 2007 Resolution which considered
petitioners McArthur, Tesoro and Narra as foreign corporations. Nevertheless, the CA determined that the
POAs declaration that the MPSAs of McArthur, Tesoro and Narra are void is highly improper.
While the petition was pending with the CA, Redmont filed with the Office of the President (OP) a petition
dated May 7, 2010 seeking the cancellation of petitioners FTAAs. The OP rendered a Decision 26 on April
6, 2011, wherein it canceled and revoked petitioners FTAAs for violating and circumventing the
"Constitution x x x[,] the Small Scale Mining Law and Environmental Compliance Certificate as well as
Sections 3 and 8 of the Foreign Investment Act and E.O. 584." 27 The OP, in affirming the cancellation of
the issued FTAAs, agreed with Redmont stating that petitioners committed violations against the
abovementioned laws and failed to submit evidence to negate them. The Decision further quoted the
December 14, 2007 Order of the POA focusing on the alleged misrepresentation and claims made by
petitioners of being domestic or Filipino corporations and the admitted continued mining operation of
PMDC using their locally secured Small Scale Mining Permit inside the area earlier applied for an MPSA
application which was eventually transferred to Narra. It also agreed with the POAs estimation that the
filing of the FTAA applications by petitioners is a clear admission that they are "not capable of conducting
a large scale mining operation and that they need the financial and technical assistance of a foreign entity
in their operation, that is why they sought the participation of MBMI Resources, Inc." 28 The Decision
further quoted:
The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate
the violations and lack of qualification of the respondent corporations to engage in mining. The filing of the
FTAA application conversion which is allowed foreign corporation of the earlier MPSA is an admission that
indeed the respondent is not Filipino but rather of foreign nationality who is disqualified under the laws.
Corporate documents of MBMI Resources, Inc. furnished its stockholders in their head office in Canada
suggest that they are conducting operation only through their local counterparts. 29
The Motion for Reconsideration of the Decision was further denied by the OP in a Resolution 30 dated July
6, 2011. Petitioners then filed a Petition for Review on Certiorari of the OPs Decision and Resolution with
the CA, docketed as CA-G.R. SP No. 120409. In the CA Decision dated February 29, 2012, the CA
affirmed the Decision and Resolution of the OP. Thereafter, petitioners appealed the same CA decision to
this Court which is now pending with a different division.
Thus, the instant petition for review against the October 1, 2010 Decision of the CA. Petitioners put forth
the following errors of the CA:
I.
The Court of Appeals erred when it did not dismiss the case for mootness despite the fact that the
subject matter of the controversy, the MPSA Applications, have already been converted into FTAA
applications and that the same have already been granted.
II.
The Court of Appeals erred when it did not dismiss the case for lack of jurisdiction considering
that the Panel of Arbitrators has no jurisdiction to determine the nationality of Narra, Tesoro and
McArthur.
III.
The Court of Appeals erred when it did not dismiss the case on account of Redmonts willful
forum shopping.
IV.
The Court of Appeals ruling that Narra, Tesoro and McArthur are foreign corporations based on
the "Grandfather Rule" is contrary to law, particularly the express mandate of the Foreign
Investments Act of 1991, as amended, and the FIA Rules.
V.
The Court of Appeals erred when it applied the exceptions to the res inter alios acta rule.
VI.
The Court of Appeals erred when it concluded that the conversion of the MPSA Applications into
FTAA Applications were of "suspicious nature" as the same is based on mere conjectures and
surmises without any shred of evidence to show the same.31
We find the petition to be without merit.
This case not moot and academic
The claim of petitioners that the CA erred in not rendering the instant case as moot is without merit.
Basically, a case is said to be moot and/or academic when it "ceases to present a justiciable controversy
by virtue of supervening events, so that a declaration thereon would be of no practical use or
value."32 Thus, the courts "generally decline jurisdiction over the case or dismiss it on the ground of
mootness."33
The "mootness" principle, however, does accept certain exceptions and the mere raising of an issue of
"mootness" will not deter the courts from trying a case when there is a valid reason to do so. In David v.
Macapagal-Arroyo (David), the Court provided four instances where courts can decide an otherwise moot
case, thus:
1.) There is a grave violation of the Constitution;
2.) The exceptional character of the situation and paramount public interest is involved;
3.) When constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; and
4.) The case is capable of repetition yet evading review.34
All of the exceptions stated above are present in the instant case. We of this Court note that a grave
violation of the Constitution, specifically Section 2 of Article XII, is being committed by a foreign
corporation right under our countrys nose through a myriad of corporate layering under different,
allegedly, Filipino corporations. The intricate corporate layering utilized by the Canadian company, MBMI,
is of exceptional character and involves paramount public interest since it undeniably affects the
exploitation of our 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."35 Finally, the instant case is capable of repetition yet evading review, since the Canadian
company, MBMI, can keep on utilizing dummy Filipino corporations through various schemes of corporate
layering and conversion of applications to skirt the constitutional prohibition against foreign mining in
Philippine soil.
Conversion of MPSA applications to FTAA applications
We shall discuss the first error in conjunction with the sixth error presented by petitioners since both
involve the conversion of MPSA applications to FTAA applications. Petitioners propound that the CA erred
in ruling against them since the questioned MPSA applications were already converted into FTAA
applications; thus, the issue on the prohibition relating to MPSA applications of foreign mining
corporations is academic. Also, petitioners would want us to correct the CAs finding which deemed the
aforementioned conversions of applications as suspicious in nature, since it is based on mere conjectures
and surmises and not supported with evidence.
We disagree.
The CAs analysis of the actions of petitioners after the case was filed against them by respondent is on
point. The changing of applications by petitioners from one type to another just because a case was filed
against them, in truth, would raise not a few sceptics eyebrows. What is the reason for such conversion?
Did the said conversion not stem from the case challenging their citizenship and to have the case
dismissed against them for being "moot"? It is quite obvious that it is petitioners strategy to have the case
dismissed against them for being "moot."
Consider the history of this case and how petitioners responded to every action done by the court or
appropriate government agency: on January 2, 2007, Redmont filed three separate petitions for denial of
the MPSA applications of petitioners before the POA. On June 15, 2007, petitioners filed a conversion of
their MPSA applications to FTAAs. The POA, in its December 14, 2007 Resolution, observed this suspect
change of applications while the case was pending before it and held:
The filing of the Financial or Technical Assistance Agreement application is a clear admission that the
respondents are not capable of conducting a large scale mining operation and that they need the financial
and technical assistance of a foreign entity in their operation that is why they sought the participation of
MBMI Resources, Inc. The participation of MBMI in the corporation only proves the fact that it is the
Canadian company that will provide the finances and the resources to operate the mining areas for the
greater benefit and interest of the same and not the Filipino stockholders who only have a less substantial
financial stake in the corporation.
xxxx
x x x The filing of the FTAA application on June 15, 2007, during the pendency of the case only
demonstrate the violations and lack of qualification of the respondent corporations to engage in mining.
The filing of the FTAA application conversion which is allowed foreign corporation of the earlier MPSA is
an admission that indeed the respondent is not Filipino but rather of foreign nationality who is disqualified
under the laws. Corporate documents of MBMI Resources, Inc. furnished its stockholders in their head
office in Canada suggest that they are conducting operation only through their local counterparts. 36
On October 1, 2010, the CA rendered a Decision which partially granted the petition, reversing and setting
aside the September 10, 2008 and July 1, 2009 Orders of the MAB. In the said Decision, the CA upheld
the findings of the POA of the DENR that the herein petitioners are in fact foreign corporations thus a
recommendation of the rejection of their MPSA applications were recommended to the Secretary of the
DENR. With respect to the FTAA applications or conversion of the MPSA applications to FTAAs, the CA
deferred the matter for the determination of the Secretary of the DENR and the President of the Republic
of the Philippines.37
In their Motion for Reconsideration dated October 26, 2010, petitioners prayed for the dismissal of the
petition asserting that on April 5, 2010, then President Gloria Macapagal-Arroyo signed and issued in their
favor FTAA No. 05-2010-IVB, which rendered the petition moot and academic. However, the CA, in a
Resolution dated February 15, 2011 denied their motion for being a mere "rehash of their claims and
defenses."38 Standing firm on its Decision, the CA affirmed the ruling that petitioners are, in fact, foreign
corporations. On April 5, 2011, petitioners elevated the case to us via a Petition for Review on Certiorari
under Rule 45, questioning the Decision of the CA. Interestingly, the OP rendered a Decision dated April
6, 2011, a day after this petition for review was filed, cancelling and revoking the FTAAs, quoting the
Order of the POA and stating that petitioners are foreign corporations since they needed the financial
strength of MBMI, Inc. in order to conduct large scale mining operations. The OP Decision also based the
cancellation on the misrepresentation of facts and the violation of the "Small Scale Mining Law and
Environmental Compliance Certificate as well as Sections 3 and 8 of the Foreign Investment Act and E.O.
584."39 On July 6, 2011, the OP issued a Resolution, denying the Motion for Reconsideration filed by the
petitioners.
Respondent Redmont, in its Comment dated October 10, 2011, made known to the Court the fact of the
OPs Decision and Resolution. In their Reply, petitioners chose to ignore the OP Decision and continued
to reuse their old arguments claiming that they were granted FTAAs and, thus, the case was moot.
Petitioners filed a Manifestation and Submission dated October 19, 2012, 40 wherein they asserted that the
present petition is moot since, in a remarkable turn of events, MBMI was able to sell/assign all its
shares/interest in the "holding companies" to DMCI Mining Corporation (DMCI), a Filipino corporation
and, in effect, making their respective corporations fully-Filipino owned.
Again, it is quite evident that petitioners have been trying to have this case dismissed for being "moot."
Their final act, wherein MBMI was able to allegedly sell/assign all its shares and interest in the petitioner
"holding companies" to DMCI, only proves that they were in fact not Filipino corporations from the start.
The recent divesting of interest by MBMI will not change the stand of this Court with respect to the
nationality of petitioners prior the suspicious change in their corporate structures. The new documents
filed by petitioners are factual evidence that this Court has no power to verify.
The only thing clear and proved in this Court is the fact that the OP declared that petitioner corporations
have violated several mining laws and made misrepresentations and falsehood in their applications for
FTAA which lead to the revocation of the said FTAAs, demonstrating that petitioners are not beyond going
against or around the law using shifty actions and strategies. Thus, in this instance, we can say that their
claim of mootness is moot in itself because their defense of conversion of MPSAs to FTAAs has been
discredited by the OP Decision.
Grandfather test
The main issue in this case is centered on the issue of petitioners nationality, whether Filipino or foreign.
In their previous petitions, they had been adamant in insisting that they were Filipino corporations, until
they submitted their Manifestation and Submission dated October 19, 2012 where they stated the alleged
change of corporate ownership to reflect their Filipino ownership. Thus, there is a need to determine the
nationality of petitioner corporations.
Basically, there are two acknowledged tests in determining the nationality of a corporation: the control test
and the grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopting the 1967 SEC
Rules which implemented the requirement of the Constitution and other laws pertaining to the controlling
interests in enterprises engaged in the exploitation of natural resources owned by Filipino citizens,
provides:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a
corporation or partnership at least 60% of the capital stock or capital, respectively, of which belong to
Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino
citizens, only 50,000 shares shall be counted as owned by Filipinos and the other 50,000 shall be
recorded as belonging to aliens.
The first part of paragraph 7, DOJ Opinion No. 020, stating "shares belonging to corporations or
partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of
Philippine nationality," pertains to the control test or the liberal rule. On the other hand, the second part of
the DOJ Opinion which provides, "if the percentage of the Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such percentage shall be
counted as Philippine nationality," pertains to the stricter, more stringent grandfather rule.
Prior to this recent change of events, petitioners were constant in advocating the application of the
"control test" under RA 7042, as amended by RA 8179, otherwise known as the Foreign Investments Act
(FIA), rather than using the stricter grandfather rule. The pertinent provision under Sec. 3 of the FIA
provides:
SECTION 3. Definitions. - As used in this Act:
a.) The term Philippine national shall mean a citizen of the Philippines; or a domestic partnership or
association wholly owned by the citizens of the Philippines; a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is
wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty percent (60%) of the fund will accrue
to the benefit of Philippine nationals: Provided, That were a corporation and its non-Filipino stockholders
own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent
(60%) of the capital stock outstanding and entitled to vote of each of both corporations must be owned
and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of
Directors, in order that the corporation shall be considered a Philippine national. (emphasis supplied)
The grandfather rule, petitioners reasoned, has no leg to stand on in the instant case since the definition
of a "Philippine National" under Sec. 3 of the FIA does not provide for it. They further claim that the
grandfather rule "has been abandoned and is no longer the applicable rule." 41 They also opined that the
last portion of Sec. 3 of the FIA admits the application of a "corporate layering" scheme of corporations.
Petitioners claim that the clear and unambiguous wordings of the statute preclude the court from
construing it and prevent the 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.
We disagree. "Corporate layering" is admittedly allowed by the FIA; but if it is used to circumvent the
Constitution and pertinent laws, then it becomes illegal. Further, the pronouncement of petitioners that the
grandfather rule has already been abandoned must be discredited for lack of basis.
Art. XII, Sec. 2 of the Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces
of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake such activities, or it may enter into co-
production, joint venture or production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may
be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law.
xxxx
The President may enter into agreements with Foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources. (emphasis supplied)
The emphasized portion of Sec. 2 which focuses on the State entering into different types of agreements
for the exploration, development, and utilization of natural resources with entities who are deemed Filipino
due to 60 percent ownership of capital is pertinent to this case, since the issues are centered on the
utilization of our countrys natural resources or specifically, mining. Thus, there is a need to ascertain the
nationality of petitioners since, as the Constitution so provides, such agreements are only allowed
corporations or associations "at least 60 percent of such capital is owned by such citizens." The
deliberations in the Records of the 1986 Constitutional Commission shed light on how a citizenship of a
corporation will be determined:
Mr. BENNAGEN: Did I hear right that the Chairmans interpretation of an independent national economy
is freedom from undue foreign control? What is the meaning of undue foreign control?
MR. VILLEGAS: Undue foreign control is foreign control which sacrifices national sovereignty and the
welfare of the Filipino in the economic sphere.
MR. BENNAGEN: Why does it have to be qualified still with the word "undue"? Why not simply freedom
from foreign control? I think that is the meaning of independence, because as phrased, it still allows for
foreign control.
MR. VILLEGAS: It will now depend on the interpretation because if, for example, we retain the 60/40
possibility in the cultivation of natural resources, 40 percent involves some control; not total control, but
some control.
MR. BENNAGEN: In any case, I think in due time we will propose some amendments.
MR. VILLEGAS: Yes. But we will be open to improvement of the phraseology.
Mr. BENNAGEN: Yes.
Thank you, Mr. Vice-President.
xxxx
MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity;
namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-1/3 in Section 15.
MR. VILLEGAS: That is right.

MR. NOLLEDO: In teaching law, we are always faced with the question: Where do we base the equity
requirement, is it on the authorized capital stock, on the subscribed capital stock, or on the paid-up capital
stock of a corporation? Will the Committee please enlighten me on this?
MR. VILLEGAS: We have just had a long discussion with the members of the team from the UP Law
Center who provided us with a draft. The phrase that is contained here which we adopted from the UP
draft is 60 percent of the voting stock.
MR. NOLLEDO: That must be based on the subscribed capital stock, because unless declared
delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS: That is right.
MR. NOLLEDO: Thank you.
With respect to an investment by one corporation in another corporation, say, a corporation with 60-40
percent equity invests in another corporation which is permitted by the Corporation Code, does the
Committee adopt the grandfather rule?
MR. VILLEGAS: Yes, that is the understanding of the Committee.
MR. NOLLEDO: Therefore, we need additional Filipino capital?
MR. VILLEGAS: Yes.42 (emphasis supplied)
It is apparent that it is the intention of the framers of the Constitution to apply the grandfather rule in cases
where corporate layering is present.
Elementary in statutory construction is when there is conflict between the Constitution and a statute, the
Constitution will prevail. In this instance, specifically pertaining to the provisions under Art. XII of the
Constitution on National Economy and Patrimony, Sec. 3 of the FIA will have no place of application. As
decreed by the honorable framers of our Constitution, the grandfather rule prevails and must be applied.
Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:
The above-quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation
for purposes, among others, of determining compliance with nationality requirements (the Investee
Corporation). Such manner of computation is necessary since the shares in the Investee Corporation
may be owned both by individual stockholders (Investing Individuals) and by corporations and
partnerships (Investing Corporation). The said rules thus provide for the determination of nationality
depending on the ownership of the Investee Corporation and, in certain instances, the Investing
Corporation.
Under the above-quoted SEC Rules, there are two cases in determining the nationality of the Investee
Corporation. The first case is the liberal rule, later coined by the SEC as the Control Test in its 30 May
1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states,
(s)hares belonging to corporations or partnerships at least 60% of the capital of which is owned by
Filipino citizens shall be considered as of Philippine nationality. Under the liberal Control Test, there is no
need to further trace the ownership of the 60% (or more) Filipino stockholdings of the Investing
Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino.
The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said
Paragraph 7 of the 1967 SEC Rules which states, "but if the percentage of Filipino ownership in the
shall be counted as of Philippine nationality." Under the Strict Rule or Grandfather Rule Proper, the
combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e.,
"grandfathered") to determine the total percentage of Filipino ownership.
Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing
Corporation and added to the shares directly owned in the Investee Corporation x x x.
xxxx
In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of
the SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases
where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino
stockholdings [or 59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or
the 59% less Filipino). Stated differently, where the 60-40 Filipino- foreign equity ownership is not in
doubt, the Grandfather Rule will not apply. (emphasis supplied)
After a scrutiny of the evidence extant on record, the Court finds that this case calls for the application of
the grandfather rule since, as ruled by the POA and affirmed by the OP, doubt prevails and persists in the
corporate ownership of petitioners. Also, as found by the CA, doubt is present in the 60-40 Filipino equity
ownership of petitioners Narra, McArthur and Tesoro, since their common investor, the 100% Canadian
corporationMBMI, funded them. However, petitioners also claim that there is "doubt" only when the
stockholdings of Filipinos are less than 60%.43
The assertion of petitioners that "doubt" only exists when the stockholdings are less than 60% fails to
convince this Court. DOJ Opinion No. 20, which petitioners quoted in their petition, only made an example
of an instance where "doubt" as to the ownership of the corporation exists. It would be ludicrous to limit
the application of the said word only to the instances where the stockholdings of non-Filipino stockholders
are more than 40% of the total stockholdings in a corporation. The corporations interested in
circumventing our laws would clearly strive to have "60% Filipino Ownership" at face value. It would be
senseless for these applying corporations to state in their respective articles of incorporation that they
have less than 60% Filipino stockholders since the applications will be denied instantly. Thus, various
corporate schemes and layerings are utilized to circumvent the application of the Constitution.
Obviously, the instant case presents a situation which exhibits a scheme employed by stockholders to
circumvent the law, creating a cloud of doubt in the Courts mind. To determine, therefore, the actual
participation, direct or indirect, of MBMI, the grandfather rule must be used.
McArthur Mining, Inc.
To establish the actual ownership, interest or participation of MBMI in each of petitioners corporate
structure, they have to be "grandfathered."
As previously discussed, McArthur acquired its MPSA application from MMC, which acquired its
application from SMMI. McArthur has a capital stock of ten million pesos (PhP 10,000,000) divided into
10,000 common shares at one thousand pesos (PhP 1,000) per share, subscribed to by the following: 44
Name Nationality Number of Amount Amount Paid

Shares Subscribed
Madridejos Mining Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00
Corporation
MBMI Resources, Canadian 3,998 PhP 3,998,000.0 PhP 1,878,174.60
Inc.
Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00
Esguerra
Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00
Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00
Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60
(emphasis supplied)
Interestingly, looking at the corporate structure of MMC, we take note that it has a similar structure and
composition as McArthur. In fact, it would seem that MBMI is also a major investor and "controls" 45 MBMI
and also, similar nominal shareholders were present, i.e. Fernando B. Esguerra (Esguerra), Lauro L.
Salazar (Salazar), Michael T. Mason (Mason) and Kenneth Cawkell (Cawkell):
Madridejos Mining Corporation

Shares Subscribed
Olympic Mines & Filipino 6,663 PhP 6,663,000.00
PhP 0
Development
Corp.
MBMI Canadian 3,331 PhP 3,331,000.00 PhP 2,803,900.00

Resources,
Inc.
Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00

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

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

Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
(emphasis supplied)
Noticeably, Olympic Mines & Development Corporation (Olympic) did not pay any amount with respect to
the number of shares they subscribed to in the corporation, which is quite absurd since Olympic is the
major stockholder in MMC. MBMIs 2006 Annual Report sheds light on why Olympic failed to pay any
amount with respect to the number of shares it subscribed to. It states that Olympic entered into joint
venture agreements with several Philippine companies, wherein it holds directly and indirectly a 60%
effective equity interest in the Olympic Properties.46 Quoting the said Annual report:
On September 9, 2004, the Company and Olympic Mines & Development Corporation ("Olympic")
entered into a series of agreements including a Property Purchase and Development Agreement (the
Transaction Documents) with respect to three nickel laterite properties in Palawan, Philippines (the
"Olympic Properties"). The Transaction Documents effectively establish a joint venture between the
Company and Olympic for purposes of developing the Olympic Properties. The Company holds directly
and indirectly an initial 60% interest in the joint venture. Under certain circumstances and upon achieving
certain milestones, the Company may earn up to a 100% interest, subject to a 2.5% net revenue
royalty.47 (emphasis supplied)
Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered," company layering
was utilized by MBMI to gain control over McArthur. It is apparent that MBMI has more than 60% or more
equity interest in McArthur, making the latter a foreign corporation.
Tesoro Mining and Development, Inc.
Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten million pesos (PhP
10,000,000) divided into ten thousand (10,000) common shares at PhP 1,000 per share, as demonstrated
below:
[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/april2014/195580.pdf]]
Shares Subscribed
Sara Marie Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00
Mining, Inc.
Resources, Inc.

Esguerra
Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Agcaoili
Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60
(emphasis supplied)
Except for the name "Sara Marie Mining, Inc.," the table above shows exactly the same figures as the
corporate structure of petitioner McArthur, down to the last centavo. All the other shareholders are the
same: MBMI, Salazar, Esguerra, Agcaoili, Mason and Cawkell. The figures under "Nationality," "Number
of Shares," "Amount Subscribed," and "Amount Paid" are exactly the same. Delving deeper, we scrutinize
SMMIs corporate structure:
Sara Marie Mining, Inc.
Shares Subscribed
Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0
Development
Corp.
MBMI Resources, Canadian 3,331 PhP 3,331,000.00 PhP 2,794,000.00
Inc.
Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00

Esguerra
Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00
Hernando
Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
(emphasis supplied)
After subsequently studying SMMIs corporate structure, it is not farfetched for us to spot the glaring
similarity between SMMI and MMCs corporate structure. Again, the presence of identical stockholders,
namely: Olympic, MBMI, Amanti Limson (Limson), Esguerra, Salazar, Hernando, Mason and Cawkell.
The figures under the headings "Nationality," "Number of Shares," "Amount Subscribed," and "Amount
Paid" are exactly the same except for the amount paid by MBMI which now reflects the amount of two
million seven hundred ninety four thousand pesos (PhP 2,794,000). Oddly, the total value of the amount
paid is two million eight hundred nine thousand nine hundred pesos (PhP 2,809,900).
Accordingly, after "grandfathering" petitioner Tesoro and factoring in Olympics participation in SMMIs
corporate structure, it is clear that MBMI is in control of Tesoro and owns 60% or more equity interest in
Tesoro. This makes petitioner Tesoro a non-Filipino corporation and, thus, disqualifies it to participate in
the exploitation, utilization and development of our natural resources.
Narra Nickel Mining and Development Corporation
Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDCs MPSA
application, whose corporate structures arrangement is similar to that of the first two petitioners
discussed. The capital stock of Narra is ten million pesos (PhP 10,000,000), which is divided into ten
thousand common shares (10,000) at one thousand pesos (PhP 1,000) per share, shown as follows:
Shares Subscribed
Patricia Louise Filipino 5,997 PhP 5,997,000.00 PhP 1,677,000.00

Mining &
Development
Corp.
Resources, Inc.
Higinio C. Filipino 1 PhP 1,000.00 PhP 1,000.00
Mendoza, Jr.
Henry E. Filipino 1 PhP 1,000.00 PhP 1,000.00
Fernandez
Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Agcaoili
Ma. Elena A. Filipino 1 PhP 1,000.00 PhP 1,000.00
Bocalan
Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00
Robert L. American 1 PhP 1,000.00 PhP 1,000.00
McCurdy
Total 10,000 PhP 10,000,000.00 PhP 2,800,000.00

(emphasis supplied)
Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and Esguerra, is present in this
corporate structure.
Patricia Louise Mining & Development Corporation
Using the grandfather method, we further look and examine PLMDCs corporate structure:
Name Nationality Amount Amount Paid
Number of Subscribed
Shares
Palawan Alpha South Resources Filipino 6,596 PhP PhP 0

Development Corporation 6,596,000.00
MBMI Resources, Canadian 3,396 PhP PhP
3,396,000.00 2,796,000.00
Inc.
Higinio C. Mendoza, Jr. Filipino 1 PhP 1,000.00 PhP 1,000.00

Fernando B. Esguerra Filipino 1 PhP 1,000.00 PhP 1,000.00
Henry E. Fernandez Filipino 1 PhP 1,000.00 PhP 1,000.00
Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00
Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP PhP
10,000,000.00 2,708,174.60
(emphasis
supplied)
Yet again, the usual players in petitioners corporate structures are present. Similarly, the amount of
money paid by the 2nd tier majority stock holder, in this case, Palawan Alpha South Resources and
Development Corp. (PASRDC), is zero.
Studying MBMIs Summary of Significant Accounting Policies dated October 31, 2005 explains the reason
behind the intricate corporate layering that MBMI immersed itself in:
JOINT VENTURES The Companys ownership interests in various mining ventures engaged in the
acquisition, exploration and development of mineral properties in the Philippines is described as follows:
(a) Olympic Group
The Philippine companies holding the Olympic Property, and the ownership and interests therein, are as
follows:
Olympic- Philippines (the "Olympic Group")
Sara Marie Mining Properties Ltd. ("Sara Marie") 33.3%
Tesoro Mining & Development, Inc. (Tesoro) 60.0%

Pursuant to the Olympic joint venture agreement the Company holds directly and indirectly an effective
equity interest in the Olympic Property of 60.0%. Pursuant to a shareholders agreement, the Company
exercises joint control over the companies in the Olympic Group.
(b) Alpha Group
The Philippine companies holding the Alpha Property, and the ownership interests therein, are as follows:
Alpha- Philippines (the "Alpha Group")
Patricia Louise Mining Development Inc. ("Patricia") 34.0%
Narra Nickel Mining & Development Corporation (Narra) 60.4%
Under a joint venture agreement the Company holds directly and indirectly an effective equity interest in
the Alpha Property of 60.4%. Pursuant to a shareholders agreement, the Company exercises joint control
over the companies in the Alpha Group.48 (emphasis supplied)
Concluding from the above-stated facts, it is quite safe to say that petitioners McArthur, Tesoro and Narra
are not Filipino since MBMI, a 100% Canadian corporation, owns 60% or more of their equity interests.
Such conclusion is derived from grandfathering petitioners corporate owners, namely: MMI, SMMI and
PLMDC. Going further and adding to the picture, MBMIs Summary of Significant Accounting Policies
statement regarding the "joint venture" agreements that it entered into with the "Olympic" and "Alpha"
groupsinvolves SMMI, Tesoro, PLMDC and Narra. Noticeably, the ownership of the "layered"
corporations boils down to MBMI, Olympic or corporations under the "Alpha" group wherein MBMI has
joint venture agreements with, practically exercising majority control over the corporations mentioned. In
effect, whether looking at the capital structure or the underlying relationships between and among the
corporations, petitioners are NOT Filipino nationals and must be considered foreign since 60% or more of
their capital stocks or equity interests are owned by MBMI.
Application of the res inter alios acta rule
Petitioners question the CAs use of the exception of the res inter alios acta or the "admission by co-
partner or agent" rule and "admission by privies" under the Rules of Court in the instant case, by pointing
out that statements made by MBMI should not be admitted in this case since it is not a party to the case
and that it is not a "partner" of petitioners.
Secs. 29 and 31, Rule 130 of the Revised Rules of Court provide:
Sec. 29. Admission by co-partner or agent.- The act or declaration of a partner or agent of the party within
the scope of his authority and during the existence of the partnership or agency, may be given in evidence
against such party after the partnership or agency is shown by evidence other than such act or
declaration itself. The same rule applies to the act or declaration of a joint owner, joint debtor, or other
person jointly interested with the party.
Sec. 31. Admission by privies.- Where one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence against the former.
Petitioners claim that before the above-mentioned Rule can be applied to a case, "the partnership relation
must be shown, and that proof of the fact must be made by evidence other than the admission
itself."49 Thus, petitioners assert that the CA erred in finding that a partnership relationship exists between
them and MBMI because, in fact, no such partnership exists.
Partnerships vs. joint venture agreements
Petitioners claim that the CA erred in applying Sec. 29, Rule 130 of the Rules by stating that "by entering
into a joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur. They challenged the
conclusion of the CA which pertains to the close characteristics of
"partnerships" and "joint venture agreements." Further, they asserted that before this particular
partnership can be formed, it should have been formally reduced into writing since the capital involved is
more than three thousand pesos (PhP 3,000). Being that there is no evidence of written agreement to
form a partnership between petitioners and MBMI, no partnership was created.
We disagree.
A partnership is defined as two or more persons who bind themselves to contribute money, property, or
industry to a common fund with the intention of dividing the profits among themselves. 50 On the other
hand, joint ventures have been deemed to be "akin" to partnerships since it is difficult to distinguish
between joint ventures and partnerships. Thus:
[T]he relations of the parties to a joint venture and the nature of their association are so similar and
closely akin to a partnership that it is ordinarily held that their rights, duties, and liabilities are to be tested
by rules which are closely analogous to and substantially the same, if not exactly the same, as those
which govern partnership. In fact, it has been said that the trend in the law has been to blur the
distinctions between a partnership and a joint venture, very little law being found applicable to one that
does not apply to the other.51
Though some claim that partnerships and joint ventures are totally different animals, there are very few
rules that differentiate one from the other; thus, joint ventures are deemed "akin" or similar to a
partnership. In fact, in joint venture agreements, rules and legal incidents governing partnerships are
applied.52
Accordingly, culled from the incidents and records of this case, it can be assumed that the relationships
entered between and among petitioners and MBMI are no simple "joint venture agreements." As a rule,
corporations are prohibited from entering into partnership agreements; consequently, corporations enter
into joint venture agreements with other corporations or partnerships for certain transactions in order to
form "pseudo partnerships."
Obviously, as the intricate web of "ventures" entered into by and among petitioners and MBMI was
executed to circumvent the legal prohibition against corporations entering into partnerships, then the
relationship created should be deemed as "partnerships," and the laws on partnership should be applied.
Thus, a joint venture agreement between and among corporations may be seen as similar to partnerships
since the elements of partnership are present.
Considering that the relationships found between petitioners and MBMI are considered to be
partnerships, then the CA is justified in applying Sec. 29, Rule 130 of the Rules by stating that "by
entering into a joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur.
Panel of Arbitrators jurisdiction
We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant case. The POA
has jurisdiction to settle disputes over rights to mining areas which definitely involve the petitions filed by
Redmont against petitioners Narra, McArthur and Tesoro. Redmont, by filing its petition against
petitioners, is asserting the right of Filipinos over mining areas in the Philippines against alleged foreign-
owned mining corporations. Such claim constitutes a "dispute" found in Sec. 77 of RA 7942:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall
have exclusive and original jurisdiction to hear and decide the following:
(a) Disputes involving rights to mining areas
(b) Disputes involving mineral agreements or permits
We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.: 53
The phrase "disputes involving rights to mining areas" refers to any adverse claim, protest, or opposition
to an application for mineral agreement. The POA therefore has the jurisdiction to resolve any adverse
claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned
Regional Office of the MGB. This is clear from Secs. 38 and 41 of the DENR AO 96-40, which provide:
Sec. 38.
xxxx
Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the
authorized officer(s) of the concerned office(s) shall issue a certification(s) that the
publication/posting/radio announcement have been complied with. Any adverse claim, protest, opposition
shall be filed directly, within thirty (30) calendar days from the last date of publication/posting/radio
announcement, with the concerned Regional Office or through any concerned PENRO or CENRO for
filing in the concerned Regional Office for purposes of its resolution by the Panel of Arbitrators pursuant to
the provisions of this Act and these implementing rules and regulations. Upon final resolution of any
adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a certification to that
effect within five (5) working days from the date of finality of resolution thereof. Where there is no adverse
claim, protest or opposition, the Panel of Arbitrators shall likewise issue a Certification to that effect within
five working days therefrom.
xxxx
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied
with and any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.
Sec. 41.
xxxx
Within fifteen (15) working days form the receipt of the Certification issued by the Panel of Arbitrators as
provided in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral
Agreement applications in areas outside Mineral reservations. He/She shall thereafter endorse his/her
findings to the Bureau for further evaluation by the Director within fifteen (15) working days from receipt of
forwarded documents. Thereafter, the Director shall endorse the same to the secretary for
consideration/approval within fifteen working days from receipt of such endorsement.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working
days from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38
hereof, the same shall be evaluated and endorsed by the Director to the Secretary for
consideration/approval within fifteen days from receipt of such endorsement. (emphasis supplied)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas"
under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral
agreement or conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is
further elucidated by Secs. 219 and 43 of DENR AO 95-936, which read:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28,
43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be filed
directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
opposition as specified in said Sections.
Sec. 43. Publication/Posting of Mineral Agreement.-
xxxx
The Regional Director or concerned Regional Director shall also cause the posting of the application on
the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and
municipality(ies), copy furnished the barangays where the proposed contract area is located once a week
for two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days
from the last date of publication/posting has been made and no adverse claim, protest or opposition was
filed within the said forty-five (45) days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or opposition of whatever nature
has been filed. On the other hand, if there be any adverse claim, protest or opposition, the same shall be
filed within forty-five (45) days from the last date of publication/posting, with the Regional Offices
concerned, or through the Departments Community Environment and Natural Resources Officers
(CENRO) or Provincial Environment and Natural Resources Officers (PENRO), to be filed at the Regional
Office for resolution of the Panel of Arbitrators. However previously published valid and subsisting mining
claims are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied
with and any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of
Arbitrators. (Emphasis supplied.)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas"
under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral
agreement or conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is
further elucidated by Secs. 219 and 43 of DENRO AO 95-936, which reads:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28,
43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be filed
directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
opposition as specified in said Sections.
Sec. 43. Publication/Posting of Mineral Agreement Application.-
xxxx
The Regional Director or concerned Regional Director shall also cause the posting of the application on
the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and
municipality(ies), copy furnished the barangays where the proposed contract area is located once a week
for two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days
from the last date of publication/posting has been made and no adverse claim, protest or opposition was
filed within the said forty-five (45) days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or opposition of whatever nature
has been filed. On the other hand, if there be any adverse claim, protest or opposition, the same shall be
filed within forty-five (45) days from the last date of publication/posting, with the Regional offices
concerned, or through the Departments Community Environment and Natural Resources Officers
(CENRO) or Provincial Environment and Natural Resources Officers (PENRO), to be filed at the Regional
Office for resolution of the Panel of Arbitrators. However, previously published valid and subsisting mining
claims are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied
with and any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of
Arbitrators. (Emphasis supplied.)
These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition,
or protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse claims,
conflicts and oppositions relating to applications for the grant of mineral rights.
POAs jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it
has no authority to approve or reject said applications. Such power is vested in the DENR Secretary upon
recommendation of the MGB Director. Clearly, POAs jurisdiction over "disputes involving rights to mining
areas" has nothing to do with the cancellation of existing mineral agreements. (emphasis ours)
Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes
over MPSA applications subject of Redmonts petitions. However, said jurisdiction does not include either
the approval or rejection of the MPSA applications, which is vested only upon the Secretary of the DENR.
Thus, the finding of the POA, with respect to the rejection of petitioners MPSA applications being that
they are foreign corporation, is valid.
Justice Marvic Mario Victor F. Leonen, in his Dissent, asserts that it is the regular courts, not the POA,
that has jurisdiction over the MPSA applications of petitioners.
This postulation is incorrect.
It is basic that the jurisdiction of the court is determined by the statute in force at the time of the
commencement of the action.54
Sec. 19, Batas Pambansa Blg. 129 or "The Judiciary Reorganization
Act of 1980" reads:
Sec. 19. Jurisdiction in Civil Cases.Regional Trial Courts shall exercise exclusive original jurisdiction:
1. In all civil actions in which the subject of the litigation is incapable of pecuniary estimation.
On the other hand, the jurisdiction of POA is unequivocal from Sec. 77 of RA 7942:
Section 77. Panel of Arbitrators.
x x x Within thirty (30) days, after the submission of the case by the parties for the decision, the
panel shall have exclusive and original jurisdiction to hear and decide the following:
(c) Disputes involving rights to mining areas
(d) Disputes involving mineral agreements or permits
It is clear that POA has exclusive and original jurisdiction over any and all disputes involving rights to
mining areas. One such dispute is an MPSA application to which an adverse claim, protest or opposition
is filed by another interested applicant.1wphi1 In the case at bar, the dispute arose or originated from
MPSA applications where petitioners are asserting their rights to mining areas subject of their respective
MPSA applications. Since respondent filed 3 separate petitions for the denial of said applications, then a
controversy has developed between the parties and it is POAs jurisdiction to resolve said disputes.
Moreover, the jurisdiction of the RTC involves civil actions while what petitioners filed with the DENR
Regional Office or any concerned DENRE or CENRO are MPSA applications. Thus POA has jurisdiction.
Furthermore, the POA has jurisdiction over the MPSA applications under the doctrine of primary
jurisdiction. Euro-med Laboratories v. Province of Batangas 55 elucidates:
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the
expertise, specialized training and knowledge of an administrative body, relief must first be obtained in an
administrative proceeding before resort to the courts is had even if the matter may well be within their
proper jurisdiction.
Whatever may be the decision of the POA will eventually reach the court system via a resort to the CA
and to this Court as a last recourse.
Selling of MBMIs shares to DMCI
As stated before, petitioners Manifestation and Submission dated October 19, 2012 would want us to
declare the instant petition moot and academic due to the transfer and conveyance of all the
shareholdings and interests of MBMI to DMCI, a corporation duly organized and existing under Philippine
laws and is at least 60% Philippine-owned.56 Petitioners reasoned that they now cannot be considered as
foreign-owned; the transfer of their shares supposedly cured the "defect" of their previous nationality.
They claimed that their current FTAA contract with the State should stand since "even wholly-owned
foreign corporations can enter into an FTAA with the State." 57Petitioners stress that there should no longer
be any issue left as regards their qualification to enter into FTAA contracts since they are qualified to
engage in mining activities in the Philippines. Thus, whether the "grandfather rule" or the "control test" is
used, the nationalities of petitioners cannot be doubted since it would pass both tests.
The sale of the MBMI shareholdings to DMCI does not have any bearing in the instant case and said fact
should be disregarded. The manifestation can no longer be considered by us since it is being tackled in
G.R. No. 202877 pending before this Court.1wphi1 Thus, the question of whether petitioners, allegedly a
Philippine-owned corporation due to the sale of MBMI's shareholdings to DMCI, are allowed to enter into
FTAAs with the State is a non-issue in this case.
In ending, the "control test" is still the prevailing mode of determining whether or not a corporation is a
Filipino corporation, within the ambit of Sec. 2, Art. II of the 1987 Constitution, entitled to undertake the
exploration, development and utilization of the natural resources of the Philippines. When in the mind of
the Court there is doubt, based on the attendant facts and circumstances of the case, in the 60-40
Filipino-equity ownership in the corporation, then it may apply the "grandfather rule."
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Court of Appeals
Decision dated October 1, 2010 and Resolution dated February 15, 2011 are hereby AFFIRMED.
SO ORDERED.

G.R. No. 210760, January 26, 2015 Kyle Anthony Zabala, Petitioner, V. People of The Philippines, Respondent. Decision Velasco JR., J.: The Case

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G.R. No.

210760, January 26, 2015

KYLE ANTHONY ZABALA, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

VELASCO JR., J.:

Version of the Prosecution

Version of the Defense

Ruling of the RTC

Citing People v. Modesto,11 the CA said:chanroblesvirtuallawlibrary

The CA disposed of petitioners appeal as follows:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the appeal is DENIED. The assailed decision is

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PETITIONERS

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF

The Courts Ruling

Circumstantial evidence as basis for conviction

To sustain a conviction based on circumstantial evidence, it is essential that the

The prosecution failed to establish, by circumstantial

Second, the evidence presented below is insufficient to determine without a reasonable

VELASCO, JR., J.:

We find the petition to be without merit.

This case not moot and academic

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

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

Conversion of MPSA applications to FTAA applications

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

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

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

Mr. BENNAGEN: Yes.

Thank you, Mr. Vice-President.

MR. VILLEGAS: That is right.

MR. VILLEGAS: That is right.

MR. NOLLEDO: Thank you.

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

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

MR. VILLEGAS: Yes.42 (emphasis supplied)

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

McArthur Mining, Inc.

Name Nationality Number of Amount Amount Paid

Madridejos Mining Corporation

Name Nationality Number of Amount Amount Paid

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

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

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

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

Tesoro Mining and Development, Inc.

Name Nationality Number of Amount Amount Paid

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

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

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

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

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

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

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

Sara Marie Mining, Inc.

Name Nationality Number of Amount Amount Paid

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

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

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

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