Peopl vs Chowdury

 In November 1995, Bulu Chowdury and Josephine Ong were charged before the
Regional Trial Court of Manila with the crime of illegal recruitment in large
scale committed as follows:
 Calleja testified that in June 1994, she applied with Craftrade for employment as
factory worker in South Korea.
 Miranda testified that in September 1994, his cousin accompanied him to the office
of Craftrade in Ermita, Manila and introduced him to Chowdury who presented
himself as consultant and interviewer.
 Labor Employment Officer Abbelyn Caguitla of the Licensing Branch of the POEA
testified that she prepared a certification on June 9, 1996 that Chowdury and his co-
accused, Ong, were not, in their personal capacities, licensed recruiters nor were
they connected with any licensed agency.
 For his defense, Chowdury testified that he worked as interviewer at Craftrade
from 1990 until 1994. His primary duty was to interview job applicants for abroad. As
a mere employee, he only followed the instructions given by his superiors, Mr.
Emmanuel Geslani, the agencys President and General Manager, and Mr. Utkal
Chowdury, the agency's Managing Director.
 if it is shown that he actively and consciously participated in illegal
recruitment.[25]It has been held that the existence of the corporate entity does not
shield from prosecution the corporate agent who knowingly and intentionally causes
the corporation to commit a crime.

ISSUE: The fundamental issue in this case, therefore, is whether accused-

appellant knowingly and intentionally participated in the commission of the crime
charged.

We find that the prosecution failed to prove that accused-appellant was aware of
Craftrade's failure to register his name with the POEA and that he actively engaged in
recruitment despite this knowledge. The obligation to register its personnel with the
POEA belongs to the officers of the agency.[32] A mere employee of the agency cannot
be expected to know the legal requirements for its operation
Secretary of Justice
 Petitioner was the Senior Vice-President of Philippine Blooming Mills, Inc. (PBMI).
Sometime in September to October 1980, PBMI, through petitioner, applied with the
Rizal Commercial Banking Corporation (respondent bank) for the issuance of
commercial letters of credit to finance its importation of assorted goods
 Respondent bank approved the application, and irrevocable letters of credit were
issued in favor of petitioner. The goods were purchased and delivered in trust to
PBMI. Petitioner signed 13 trust receipt
 When the trust receipts matured, petitioner failed to return the goods to respondent
bank, or to return their value amounting to ₱6,940,280.66 despite demands.

Issue:
who is liable given that PD 115 reads :
If the violation or offense is committed by a corporation, partnership, association
or other judicial entities, the penalty provided for in this Decree shall be imposed
upon the directors, officers, employees or other officials or persons therein
responsible for the offense, without prejudice to the civil liabilities arising from
the criminal offense.

The Court rules that although petitioner signed the trust receipts merely as Senior Vice-
President of PBMI and had no physical possession of the goods, he cannot avoid
prosecution for violation of P.D. No. 115.

Though the entrustee is a corporation, nevertheless, the law specifically makes the
officers, employees or other officers or persons responsible for the offense, without
prejudice to the civil liabilities of such corporation and/or board of directors, officers, or
other officials or employees responsible for the offense. The rationale is that such
officers or employees are vested with the authority and responsibility to devise means
necessary to ensure compliance with the law and, if they fail to do so, are held criminally
accountable; thus, they have a responsible share in the violations of the law.

If the crime is committed by a corporation or other juridical entity, the directors, officers,
employees or other officers thereof responsible for the offense shall be charged and
penalized for the crime, precisely because of the nature of the crime and the penalty
therefor. A corporation cannot be arrested and imprisoned; hence, cannot be penalized
for a crime punishable by imprisonment.49 However, a corporation may be charged and
prosecuted for a crime if the imposable penalty is fine. Even if the statute prescribes
both fine and imprisonment as penalty, a corporation may be prosecuted and, if found
guilty, may be fined.

The principle applies whether or not the crime requires the consciousness of
wrongdoing. It applies to those corporate agents who themselves commit the crime and
to those, who, by virtue of their managerial positions or other similar relation to the
corporation, could be deemed responsible for its commission, if by virtue of their
relationship to the corporation, they had the power to prevent the act.
Gamboa vs Teves

 Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of

46.125 percent of PTIC shares is actually an indirect sale of 12 million shares or
about 6.3 percent of the outstanding common shares of PLDT. With the sale, First
Pacifics common shareholdings in PLDT increased from 30.7 percent to 37
percent, thereby increasing the common shareholdings of foreigners in PLDT
to about 81.47 percent.
 1987 Constitution mandates the Filipinization of public utilities, to wit: Section 11. No
franchise, certificate, or any other form of authorization for the operation of a
public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at
least sixty per centum of whose capital is owned by such citizens

Issue: what is the meaning of capital stock? Is it voting share?

We agree with petitioner and petitioners-in-intervention. The term capital in Section 11,
Article XII of the Constitution refers only to shares of stock entitled to vote in the election
of directors, and thus in the present case only to common shares,41 and not to the total
outstanding capital stock comprising both common and non-voting preferred shares.

Sec. 6. Classification of shares. - The shares of stock of stock corporations may be

divided into classes or series of shares, or both, any of which classes or series of shares
may have such rights, privileges or restrictions as may be stated in the articles of
incorporation: Provided, That no share may be deprived of voting rights except
those classified and issued as preferred or redeemable shares, unless otherwise
provided in this Code

However, if the preferred shares also have the right to vote in the election of directors,
then the term capital shall include such preferred shares because the right to participate
in the control or management of the corporation is exercised through the right to vote in
the election of directors. In short, the term capital in Section 11, Article XII of the
Constitution refers only to shares of stock that can vote in the election of
directors.
Roy v Herbosa

 On May 20, 2013, the SEC, through respondent Chairperson Teresita J. Herbosa,
issued SEC-MC No. 8
 Section 2. All covered corporations shall, at all times, observe the constitutional or
statutory ownership requirement. For purposes of determining compliance therewith,
the required percentage of Filipino ownership shall be applied to BOTH (a) the total
number of outstanding shares of stock entitled to vote in the election of directors;
AND (b) the total number of outstanding shares of stock, whether or not entitled to
vote in the election of directors.
 Issue: is the the Gamboa ruling on Capital stock requirements enough to satisfy the
Filipino ownership issue in a corporation or is the SEC correct in adding other
limits/requirements
 "a Filipino citizen, or a domestic corporation "at least sixty percent (60%) of the
capital stock outstanding and entitled to vote," is owned by Filipino citizens. A
domestic corporation is a "Philippine national" only if at least 60% of its voting
stock is owned by Filipino citizens."
 The FIA's implementing rules explain that "[f]or stocks to be deemed owned and held
by Philippine citizens or Philippine nationals, mere legal title is not enough to meet
the required Filipino equity. Full beneficial ownership of stocks, coupled with
appropriate voting rights is essential."

Section 2 of SEC-MC No. 8 clearly incorporates the Voting Control Test or the
controlling interest requirement. In fact, Section 2 goes beyond requiring a 60-40
ratio in favor of Filipino nationals in the voting stocks; it moreover requires the 60-
40 percentage ownership in the total number of outstanding shares of stock,
whether voting or not.

The term "full beneficial ownership" found in the FIA-IRR is to be understood in the
context of the entire paragraph defining the term "Philippine national". Mere legal title is
not enough to meet the required Filipino equity, which means that it is not sufficient that
a share is registered in the name of a Filipino citizen or national, i.e., he should also
have full beneficial ownership of the share. If the voting right of a share held in the name
of a Filipino citizen or national is assigned or transferred to

if the Filipino has the "specific stock's" voting power (he can vote the stock or direct
another to vote for him), or the Filipino has the investment power over the "specific
stock" (he can dispose of the stock or direct another to dispose it for him), or he has both
(he can vote and dispose of the "specific stock" or direct another to vote or dispose it for
him), then such Filipino is the "beneficial owner" of that "specific stock"

Narra Nickelt Mining v Redmont Mines (2014)

 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
 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
 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.

Issue : The main issue in this case is centered on the issue of petitioners’ nationality,
whether Filipino or foreign.

 if 100,000 shares are registered in the name of a corporation or partnership at least

60% of the capital stock or capital, respectively, of which belong to Filipino citizens,
all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or
say, 50% of the capital stock or capital of the corporation or partnership, respectively,
belongs to Filipino citizens, only 50,000 shares shall be counted as owned by
Filipinos and the other 50,000 shall be recorded as belonging to aliens.
 the Grandfather Rule 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).
 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.
 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.
 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.

Narra Nickelt Mining v Redmont Mines (2015)

it is only when the Control Test is first complied with that the Grandfather Rule may be
applied. Put in another manner, if the subject corporation’s Filipino equity falls below the
threshold 60%, the corporation is immediately considered foreign-owned, in which case,
the need to resort to the Grandfather Rule disappears.
On the other hand, a corporation that complies with the 60-40 Filipino to foreign equity
requirement can be considered a Filipino corporation if there is no doubtas to who has
the "beneficial ownership" and "control" of the corporation. In that instance, there is no
need fora dissection or further inquiry on the ownership of the corporate shareholders in
both the investing and investee corporation or the application of the Grandfather
Rule.12 As a corollary rule, even if the 60-40 Filipino to foreign equity ratio is apparently
met by the subject or investee corporation, a resort to the Grandfather Rule is necessary
if doubt existsas to the locusof the "beneficial ownership" and "control." In this case, a
further investigation as to the nationality of the personalities with the beneficial
ownership and control of the corporate shareholders in both the investing and investee
corporations is necessary.

some Filipino investors or businessmen are being utilized or [are] allowing themselves
to be used as dummies by foreign investors" specifically in joint ventures for national
resource exploitation. These indicators are:

1. That the foreign investors provide practically all the funds for the joint
investment undertaken by these Filipino businessmen and their foreign partner;

2. That the foreign investors undertake to provide practically all the technological
support for the joint venture;

3. That the foreign investors, while being minority stockholders, manage the
company and prepare all economic viability studies.

In a 1977 internal memorandum, the SEC suggested applying the Grandfather Rule on
two (2) levels of corporate relations for publicly-held corporations or where the shares
are traded in the stock exchanges, and to three (3) levels for closely held corporations or
the shares of which are not traded in the stock exchanges.14 These limits comply with
the requirement in Palting v. San Jose Petroleum, Inc.15 that the application of the
Grandfather Rule cannot go beyond the level of what is reasonable.

Church v LRC
 On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of the City of
Davao, executed a deed of sale of a parcel of land located in the same city covered
by Transfer Certificate No. 2263, in favor of the Roman Catholic Apostolic
Administrator of Davao Inc.,
 Roman Catholic Apostolic Administrator of Davao Inc., s corporation sole organized
and existing in accordance with Philippine Laws, with Msgr. Clovis Thibault, a
Canadian citizen, as actual incumbent. When the deed of sale was presented to
Register of Deeds of Davao for registration, the latter.
 a resolution was rendered on September 21, 1954, holding that in view of the
provisions of Section 1 and 5 of Article XIII of the Philippine Constitution, the vendee
was not qualified to acquire private lands in the Philippines in the absence of proof
that at least 60 per centum of the capital, property, or assets of the Roman Catholic
Apostolic Administrator of Davao, Inc., was actually owned or controlled by Filipino
citizens, there being no question that the present incumbent of the corporation sole
was a Canadian citizen.

ISSUE: The question now left for our determination is whether the Universal Roman
Catholic Apostolic Church in the Philippines, or better still, the corporation sole named
the Roman Catholic Apostolic Administrator of Davao, Inc., is qualified to acquire private
agricultural lands in the Philippines pursuant to the provisions of Article XIII of the
Constitution.

From the data secured from the Securities and Exchange Commission, We find that the
Roman Catholic Bishop of Zamboanga was incorporated (as a corporation sole)
in September, 1912, principally to administer its temporalities and manage its properties.

In this case of the Register of Deeds of Rizal vs. Ung Sui Si Temple, 2 G.R. No. L-6776,
promulgated May 21, 1955, wherein this question was considered from a different angle,
this Court through Mr. Justice J.B.L. Reyes, said:

The fact that the appellant religious organization has no capital stock does not
suffice to escape the Constitutional inhibition, since it is admitted that its
members are of foreign nationality. The purpose of the sixty per centum
requirement is obviously to ensure that corporation or associations allowed to
acquire agricultural land or to exploit natural resources shall be controlled by
Filipinos; and the spirit of the Constitution demands that in the absence of capital
stock, the controlling membership should be composed of Filipino citizens.

All these authorities uphold our conviction that the framers of the Constitution had not in
mind the corporations sole, nor intended to apply them the provisions of section 1 and 5
of said Article XIII when they passed and approved the same.

People vs Quasha
William H. Quasha, a member of the Philippine bar, was charged in the Court of First
Instance of Manila with the crime of falsification of a public and commercial document in
that, having been entrusted with the preparation and registration of the article of
incorporation of the Pacific Airways Corporation,
the falsification imputed in the accused in the present case consists in not disclosing in
the articles of incorporation that Baylon was a mere trustee ( or dummy as the
prosecution chooses to call him) of his American co-incorporators, thus giving the
impression that Baylon was the owner of the shares subscribed to by him which, as
above stated, amount to 60.005 per cent of the sub-scribed capital stock.

It is urged, however, that the formation of the corporation with 60 per cent of its
subscribed capital stock appearing in the name of Baylon was an indispensable
preparatory step to the subversion of the constitutional prohibition and the laws
implementing the policy expressed therein.

ISSUE: If the Constitution does not prohibit the mere formation of a public utility
corporation with the alien capital, then how can the accused be charged with having
wrongfully intended to circumvent that fundamental law by not revealing in the articles of
incorporation that Baylon was a mere trustee of his American co-incorporation and that
for that reason the subscribed capital stock of the corporation was wholly American?

This view is not correct. For a corporation to be entitled to operate a public utility it is not
necessary that it be organized with 60 per cent of its capital owned by Filipinos from the
start. A corporation formed with capital that is entirely alien may subsequently change
the nationality of its capital through transfer of shares to Filipino citizens.

What condition may anytime be attained thru the necessary transfer of stocks. The
moment for determining whether a corporation is entitled to operate as a public utility is
when it applies for a franchise, certificate, or any other form of authorization for that
purpose. And that can be done after the corporation has already come into being and
not while it is still being formed.

Kilosbayan v Guingona
This is a special civil action for prohibition and injunction, with a prayer for a temporary
restraining order and preliminary injunction, which seeks to prohibit and restrain the
implementation of the "Contract of Lease" executed by the Philippine Charity
Sweepstakes Office (PCSO) and the Philippine Gaming Management Corporation
(PGMC)

Petitioners submit that the PCSO cannot validly enter into the assailed Contract of Lease
with the PGMC because it is an arrangement wherein the PCSO would hold and conduct
the on-line lottery system in "collaboration" or "association" with the PGMC, in violation
of Section 1(B) of R.A. No. 1169, as amended by B.P. Blg. 42, which prohibits the PCSO
from holding and conducting charity sweepstakes races, lotteries, and other similar
activities "in collaboration, association or joint venture with any person, association,
company or entity, foreign or domestic."

ISSUE: is the agreement between PCSO and PGMC valid considering PCSO cannot
enter into into certain contracts and joint ventures.

the only contribution the PCSO would have is its franchise or authority to operate the
on-line lottery system; with the rest, including the risks of the business, being borne by
the proponent or bidder.

viewed then, from the very inception, the PCSO and the PGMC mutually understood that
any arrangement between them would necessarily leave to the PGMC the technical,
operations, and managementaspects of the on-line lottery system while the PCSO
would, primarily, provide the franchise.

he so-called Contract of Lease is not, therefore, what it purports to be. Its denomination
as such is a crafty device, carefully conceived, to provide a built-in defense in the event
that the agreement is questioned as violative of the exception in Section 1 (B) of the
PCSO's charter.

All of the foregoing unmistakably confirm the indispensable role of the PGMC in the
pursuit, operation, conduct, and management of the On-Line Lottery System. They
exhibit and demonstrate the parties' indivisible community of interest in the conception,
birth and growth of the on-line lottery, and, above all, in its profits, with each having a
right in the formulation and implementation of policies related to the business and
sharing, as well, in the losses — with the PGMC bearing the greatest burden because of
its assumption of expenses and risks, and the PCSO the least, because of its confessed
unwillingness to bear expenses and risks. In a manner of speaking, each is wed to the
other for better or for worse.

Tatad v Garcia

After evaluating the prequalification, bids, the PBAC issued a Resolution on May 9, 1991
declaring that of the five applicants, only the EDSA LRT Consortium "met the
requirements of garnering at least 21 points per criteria [sic], except for Legal Aspects,
and obtaining an over-all passing mark of at least 82 points" (Rollo, p. 146). The Legal
Aspects referred to provided that the BOT/BT contractor-applicant meet the
requirements specified in the Constitution and other pertinent laws

Finding this proposal to be in compliance with the bid requirements, DOTC and
respondent EDSA LRT Corporation, Ltd., in substitution of the EDSA LRT Consortium,
entered into an "Agreement to Build, Lease and Transfer a Light Rail Transit System for
EDSA" under the terms of the BOT Law

ISSUE: Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA
LRT III; a public utility

The phrasing of the question is erroneous; it is loaded. What private respondent owns
are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power
plant, not a public utility. While a franchise is needed to operate these facilities to serve
the public, they do not by themselves constitute a public utility. What constitutes a public
utility is not their ownership but their use to serve the public

The Constitution, in no uncertain terms, requires a franchise for the operation of a public
utility. However, it does not require a franchise before one can own the facilities needed
to operate a public utility so long as it does not operate them to serve the public.

The right to operate a public utility may exist independently and separately from the
ownership of the facilities thereof. One can own said facilities without operating them as
a public utility, or conversely, one may operate a public utility without owning the facilities
used to serve the public. The devotion of property to serve the public may be done by
the owner or by the person in control thereof who may not necessarily be the owner
thereof.