The Supreme Court (SC) has upheld the disqualification of three mining firms from exploration and extraction activities in the country because they were not Filipino corporations. INQUIRER FILE PHOTO
MANILA, Philippines–The Supreme Court (SC) has upheld the disqualification of three mining firms from exploration and extraction activities in the country because they were not Filipino corporations.
The tribunal’s Third Division dismissed the petition of Narra Nickel Mining and Development Corp., Tesoro Mining and Development Inc. and McArthur Mining Inc. which had sought a reversal of the Court of Appeal’s decisions dated Oct. 1, 2010, and Feb. 5, 2011.
In its April 21 ruling, the high court determined that the mining firms were not Filipino corporations because a 100-percent Canadian corporation, MBMI Resources Inc., owned 60 percent or more of their equity interests.
The magistrates used two tests to determine the nationality of a corporation—the control test and the grandfather rule which is embodied in a Department of Justice opinion in 2005.
“Shares belonging to corporations or partnerships at least 60 percent of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality (control test), but if the percentage of Filipino ownership in the corporation or partnership is less than 60 percent, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality (grandfather rule),” according to paragraph 7 of the DOJ opinion.
The Supreme Court considered the “grandfather rule” because “doubt prevails and persists in the corporate ownership of the petitioners.”
Company layering
It also looked into the corporate structure of all three mining firms and found that “company layering” was utilized by MBMI to gain control of McArthur. MBMI also controlled Tesoro and Narra.
“…(W)hether 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 percent or more of their capital stocks or equity interests are owned by MBMI,” said the 31-page division ruling penned by Associate Justice Presbitero Velasco Jr.
The high court, meanwhile, said it could not tackle the issue raised by the mining firms on the recent sale of MBMI shareholdings to DMCI, a corporation duly organized and existing under Philippine laws and which is at least 60 percent Filipino-owned.
The mining firms had told the high court that they could now be considered to be Filipino-owned because the transfer of their shares cured the defect of their previous nationality.
The Supreme Court said that it could not tackle this new manifestation by the mining firms because it was pending in another division of the court.