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MERALCO vs.

TEC ET AL
G.R. No. 131723

December 13, 2007

FACTS: Respondent T.E.A.M. Electronics Corporation (TEC) is wholly owned by respondent Technology
Electronics Assembly and Management Pacific Corporation (TPC). On the other hand, petitioner Manila
Electric Company (Meralco) is a utility company supplying electricity in the Metro Manila area.
MERALCO alleges that TEC tampered the electric meters in its buildings and should thus be liable for
differential billings. For failure of TEC to pay such differential billing, petitioner disconnected the electricity
supply to said buildings.
TEC and TPC filed a complaint for damages against MERALCO before the RTC Pasig. The RTC ruled in
favor of TEC-TPC and ordered MERALCO to pay the former AD, MD, ED and AF. The court found the
evidence of petitioner insufficient to prove that TEC was guilty of tampering the meter installations. The CA
affirmed the RTC decision with modifications, hence this petition for review on certiorari under Rule 45.
ISSUE: is the award of MD proper?
HELD: NO

We, however, deem it proper to delete the award of moral damages. TEC’s claim was premised allegedly
on the damage to its goodwill and reputation. As a rule, a corporation is not entitled to moral damages
because, not being a natural person, it cannot experience physical suffering or sentiments like wounded
feelings, serious anxiety, mental anguish and moral shock.
The only exception to this rule is when the corporation has a reputation that is debased, resulting in its
humiliation in the business realm. But in such a case, it is imperative for the claimant to present proof to
justify the award. It is essential to prove the existence of the factual basis of the damage and its causal
relation to petitioner’s acts. In the present case, the records are bereft of any evidence that the name or
reputation of TEC/TPC has been debased as a result of petitioner’s acts

WILSON P. GAMBOA vs. FINANCE SECRETARY TEVES

G.R. No. 176579, promulgated June 28, 2011

FACTS: In 1928, the Philippine Long Distance Telephone Company (PLDT) was granted a franchise to
engage in the business of telecommunications. Telecommunications is a nationalized area of activity where
a corporation engaged therein must have 60% of its capital be owned by Filipinos as provided for by Section
11, Article XII (National Economy and Patrimony) of the 1987 Constitution, 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; xxx
In 1999, First Pacific, a foreign corporation, acquired 37% of PLDT common shares. Wilson Gamboa opposed
said acquisition because at that time, 44.47% of PLDT common shares already belong to various other
foreign corporations. Hence, if First Pacific’s share is added, foreign shares will amount to 81.47% or more
than the 40% threshold prescribed by the Constitution.
Margarito Teves, as Secretary of Finance, and the other respondents argued that this is okay because in
totality, most of the capital stocks of PLDT is Filipino owned. It was explained that all PLDT subscribers,
pursuant to a law passed by Marcos, are considered shareholders (they hold serial preferred shares). Broken
down, preferred shares consist of 77.85% while common shares consist of 22.15%.
Gamboa argued that the term “capital” should only pertain to the common shares because that is the share
which is entitled to vote and thus have effective control over the corporation.
ISSUE: What does the term “capital” pertain to? Does the term “capital” in Section 11, Article XII of the
Constitution refer to common shares or to the total outstanding capital stock (combined total of common and
non-voting preferred shares)?
HELD: Gamboa is correct. Capital only pertains to common shares. It will be absurd for capital to pertain as
inclusive of non-voting shares. This is because a corporation consisting of 1,000,000 capital stocks, 100 of
which are common shares which are foreign owned and the rest (999,900 shares) are preferred shares which
are non-voting shares and are Filipino owned, would seem compliant to the constitutional requirement – here
99.999% is Filipino owned. But if scrutinized, the controlling stock – the voting stock – or that miniscule .001%
is foreign owned. That is absurd.
In this case, it is true that at least 77.85% of the capital is owned by Filipinos (the PLDT subscribers). But
these subscribers, who hold non-voting preferred shares, have no control over the corporation. Hence, capital
should only pertain to common shares.
Thus, to be compliant with the constitution, 60% of the common shares of PLDT should be Filipino owned.
That is not so in this case as it appears that 81.47% of the common shares are already foreign owned (split
between First Pacific (37%) and a Japanese corporation).
When may preferred shares be considered part of the capital share?
If the preferred shares are allowed to vote like common shares.

Narra Nickel Mining and Development Corp. vs Redmont Consolidated Mines Corporation
G.R. No. 195580 April 21, 2014

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. 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.

Issue: Whether or not the petitioner corporations are Filipino and can validly be issued MPSA and EP.

Held: No. The 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 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
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. 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.

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.

WEST COAST LIFE INSURANCE CO., vs. GEO N. HURD


G.R. No. 8527, March 30, 1914

FACTS: In 1912, West Coast Life Insurance caused the distribution of printed materials which impressed
among the readers thereof that Insular Life Insurance Company is in bad shape. Insular Life then filed a
criminal case for libel against West Coast Insurance. Judge Geo Hurd took cognizance of the case.
West Coast Insurance opposed the same as it alleged that it the filing is against prevailing rules of criminal
procedure.
ISSUE: Whether or not West Coast Life Insurance is correct.
HELD: Yes. There is no provision in the prevailing rules of criminal procedure to support the said criminal
case filed against West Coast Life Insurance. A corporation cannot be proceeded against criminally in court
primarily because a corporation cannot possibly commit a crime absent the essential element of malicious
intent. The rule is to proceed against the officials of the corporation and not the corporation itself.

JOSE O. SIA vs. THE PEOPLE OF THE PHILIPPINES

G.R. No. L-30896 April 28, 1983

FACTS:

 Sia was the President and General Manager of the Metal Manufacturing of the Philippines Inc.
(MEMAP)
 He obtained 150 M/T Cold Rolled Sheets consigned to Continental Bank and converted it into personal
used instead of selling it and turning over the proceeds
 It resulted to a damage of 46,819 php, interest of 28,736.47 php and forfeited deposit of 71,023.60 php
ISSUE: W/N Sia can be criminally charged.

HELD: NO. Acquit.


 Sia did not act for and on behalf of MEMAP
 For crimes committed by corp. officers criminally charged, existence of criminal liability for which the
petition is being prosecuted must be clear and certain, here it may not be said to be beyond reasonable
doubt
 Allegation v. evidence = strictly in harmony
 The merchandise was manufactured before sold but although the bank was aware of this, it was not in
the trust agreement