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CA
G.R. No. 124293, November 20, 2000
FACTS:
The National Investment and Development Corporation (NIDC), a
government corporation, entered into a Joint VentureAgreement (JVA)
with Kawasaki Heavy Industries, Ltd. for the construction, operation
and management of the Subic National Shipyard, Inc., later became
the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, NIDC and Kawasaki would maintain a
shareholding proportion of 60%-40% and that the parties have the right
of first refusal in case of a sale.
Through a series of transfers, NIDCs rights, title and interest in
PHILSECO eventually went to the National Government. In the interest
of national economy, it was decided that PHILSECO should be
privatized by selling 87.67% of its total outstanding capital stock to
private entities. After negotiations, it was agreed that Kawasakis right
of first refusal under the JVA be exchanged for the right to top by five
percent the highest bid for said shares. Kawasaki that Philyards
Holdings, Inc. (PHI), in which it was a stockholder, would exercise this
right in its stead.
During bidding, Kawasaki/PHI Consortium is the losing bidder. Even
so, because of the right to top by 5% percent the highest bid, it was
able to top JG Summits bid. JG Summit protested, contending that
PHILSECO, as a shipyard is a public utility and, hence, must observe
the 60%-40% Filipino-foreign capitalization. By buying 87.67% of
PHILSECOs capital stock at bidding, Kawasaki/PHI in effect now owns
more than 40% of the stock.
ISSUE:
Whether or not PHILSECO is a public utility
Whether or not Kawasaki/PHI can purchase beyond 40% of
PHILSECOs stocks
HELD:
In arguing that PHILSECO, as a shipyard, was a public utility, JG
Summit relied on sec. 13, CA No. 146. On the other hand,
Kawasaki/PHI argued that PD No. 666 explicitly stated that a
shipyard was not a public utility. But the SC stated that sec. 1 of PD
No. 666 was expressly repealed by sec. 20, BP Blg. 391 and when BP
Blg. 391 was subsequently repealed by EO 226, the latter law did not
revive sec. 1 of PD No. 666. Therefore, the law that states that a
shipyard is a public utility still stands.
A shipyard such as PHILSECO being a public utility as provided by law
is therefore required to comply with the 60%-40% capitalization under
the Constitution. Likewise, the JVA between NIDC and Kawasaki
manifests an intention of the parties to abide by this constitutional
mandate. Thus, under the JVA, should the NIDC opt to sell its shares
of stock to a third party, Kawasaki could only exercise its right of first
refusal to the extent that its total shares of stock would not exceed
40% of the entire shares of stock. The NIDC, on the other hand, may
purchase even beyond 60% of the total shares. As a government
corporation and necessarily a 100% Filipino-owned corporation, there
is nothing to prevent its purchase ofstocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign
capitalization.
Kawasaki was bound by its contractual obligation under the JVA that
limits its right of first refusal to 40% of the total capitalization of
PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the
capitalization of the joint venture onaccount of both constitutional and
contractual proscriptions.
corporation sole
1.
composed of only one persons, usually the head or bishop of
the diocese, a unit which is not subject to expansion for the
purpose of determining any percentage whatsoever
2.
only the administrator and not the owner of the temporalities
located in the territory comprised by said corporation sole
and such temporalities are administered for and on behalf of
the faithful residing in the diocese or territory of the corporation
sole
3.
has no nationality and the citizenship of the incumbent and
ordinary has nothing to do with the operation, management or
administration of the corporation sole, nor effects the
citizenship of the faithful connected with their respective
dioceses or corporation sole.