10/11/23, 12:10 PM Narra Nickel Mining and Dev’t Corp., et al. v. Redmont Consolidated Mines Corp., G.R. No.

G.R. No. 195580, 21 April 2014 | Legem Advo…

Legem Advocatus

"AN ADVOCATE SPEAKS OF REFORMS, BUT IT IS THE ADVOCATE WHO MADE REFORMS HAPPEN." – ENGRJHEZ®

Narra Nickel Mining and Dev’t Corp., et al. v. Redmont Consolidated Mines Corp., G.R.
No. 195580, 21 April 2014

18 APR
[VELASCO, JR., J.]

FACTS

Redmont Consolidated Mines, Inc. (Redmont) filed before the Panel of Arbitrators (POA) of the DENR separate petitions for denial of McArthur Mining, Inc.
(McArthur), Tesoro and Mining and Development, Inc. (Tesoro), and Narra Nickel Mining and Development Corporation (Narra) applications Mineral
Production Sharing Agreement (MPSA) on the ground that they are not “qualified persons” and thus disqualified from engaging in mining activities through
MPSAs reserved only for Filipino citizens.

McArthur Mining, Inc., is composed, among others, by Madridejos Mining Corporation (Filipino) owning 5,997 out of 10,000 shares, and MBMI Resources,
Inc. (Canadian) owning 3,998 out of 10,000 shares; MBMI also owns 3,331 out of 10,000 shares of Madridejos Mining Corporation;

Tesoro and Mining and Development, Inc., is composed, among others, by Sara Marie Mining, Inc. (Filipino) owning 5,997 out of 10,000 shares, and MBMI
Resources, Inc. (Canadian) owning 3,998 out of 10,000 shares; MBMI also owns 3,331 out of 10,000 shares of Sara Marie Mining, Inc.;

Narra Nickel Mining and Development Corporation, is composed, among others, by Patricia Louise Mining & Development Corporation (Filipino) owning
5,997 out of 10,000 shares, and MBMI Resources, Inc. (Canadian) owning 3,998 out of 10,000 shares; MBMI also owns 3,396 out of 10,000 shares of Patricia
Louise Mining & Development Corporation;

ISSUES

(1) Is the Grandfather Rule applicable?

(2) Whether McArthur, Tesoro and Narra are Filipino nationals.

RULINGS

(1) YES.

The instant case presents a situation which exhibits a scheme employed by stockholders to circumvent the law, creating a cloud of doubt in the Court’s mind.
To determine, therefore, the actual participation, direct or indirect, of MBMI, the grandfather rule must be used.

The Strict Rule or the Grandfather Rule pertains to the portion in Paragraph 7 of the 1967 SEC Rules which states, “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.” 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.

(2) NO.

[P]etitioners 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. xxx Noticeably, the ownership of the “layered” corporations boils down to xxx
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.

Advertisements
REPORT THIS AD

Leave a comment
Posted by Jhez on April 18, 2016 in Commercial Law, Corporation Law, Investment Law

Tags: grandfather, granfathered, layered, nationality, rule

Create a free website or blog at WordPress.com.

Entries (RSS) and Comments (RSS)

https://engrjhez.wordpress.com/2016/04/18/narra-nickel-mining-and-devt-corp-et-al-v-redmont-consolidated-mines-corp-g-r-no-195580-21-april-2014n… 1/1