JG Summit Holdings Inc. vs.

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No. 666 was expressly repealed by sec. 20, BP Blg. 391 and when BP
Blg. 391 was subsequently repealed by EO 226, the latter law did not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.

REGISTER OF DEEDS vs UNG SIU SI TEMPLE

GR. No. L-6776
May 21,1955
FACTS:
A Filipino citizen executed a deed of donation in favor of the Ung Siu Si
Temple, an unregistered religious organization that operated through
three trustees all of Chinese nationality. The Register of Deeds refused
to record the deed of donation executed in due form arguing that the
Consitution provides that acquisition of land is limited to Filipino
citizens, or to corporations or associations at least 60% of which is
owned by such citizens.
ISSUE:
Whether a deed of donation of a parcel of land executed in favor of a
religious organization whose founder, trustees and administrator are
Chinese citizens should be registered or not.
RULING:
Sec. 5, Art. 13 of the Constitution provides that save in cases of
hereditary succession, no private agricultural land shall be
transferred or assigned except to individuals, corporations, or
associations qualified to hold lands of the public domain in the
Philippines. The Constitution does not make any exception in
favor of religious associations.
The fact that appellant has no capital stock does not exempt it from the
Constitutional inhibition, since its member are of foreign nationality.
The purpose of the 60% requirement is to ensure that corporations or
associations allowed to acquire agricultural lands or to exploit natural
resources shall be controlled by Filipinos; and the spirit of the
Constitution demands that in the absence of capital stock,
controlling membership should be composed of Filipino citizens.
As to the complaint that the disqualification under Art. 13 of the
Constitution violated the freedom of religion, the Court was not
convinced that land tenure is indispensable to the free exercise and
enjoyment of religious profession or worship.
Corporate Law Case Digest: Roman Catholic Apostolic
Administrator Of Davao V. LRC (1957)
G.R. No. L-8451

December 20, 1957

Lesson Applicable: Exploitation of Natural Resources (Corporate Law)

FACTS:

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 in favor of the Roman Catholic Apostolic Administrator of
Davao Inc.(Roman), a corporation sole organized and existing in
accordance with Philippine Laws, with Msgr. Clovis Thibault, a
Canadian citizen, as actual incumbent.
The Register of Deeds of Davao for registration, having in
mind a previous resolution of the CFI in Carmelite Nuns of Davao
were made to prepare an affidavit to the effect that 60% of the
members of their corp. were Filipino citizens when they sought to
register in favor of their congregation of deed of donation of a
parcel of land, required it to submit a similar affidavit declaring the
same.
June 28, 1954: Roman in the letter expressed willingness to
submit an affidavit but not in the same tenor as the Carmelite
Nuns because it had five incorporators while as a corporation
sole it has only one and it was ownership through donation and
this was purchased
As the Register of the Land Registration Commissioner
(LRC) : Deeds has some doubts as to the registerability, the
matter was referred to the Land Registration Commissioner en
consulta for resolution (section 4 of Republic Act No. 1151)
LRC:
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
ordered the Registered Deeds of Davao to
deny registration of the deed of sale in the absence of proof of
compliance with such condition
action for mandamus was instituted by Roman alleging the
land is held in true for the benefit of the Catholic population of a
place

ISSUE: W/N Roman is qualified to acquire private agricultural lands in

the Philippines pursuant to the provisions of Article XIII of the
Constitution

HELD: YES. Register of Deeds of the City of Davao is ordered to

register the deed of sale
A corporation sole consists of one person only, and his
successors (who will always be one at a time), in some particular
station, who are incorporated by law in order to give them some
legal capacities and advantages, particularly that of perpetuity,
which in their natural persons they could not have had.

In this sense, the king is a sole corporation; so is a

bishop, or dens, distinct from their several chapters

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.

Constitution demands that in the absence of capital stock,

the controlling membership should be composed of Filipino
citizens. (Register of Deeds of Rizal vs. Ung Sui Si Temple)
undeniable proof that the members of the Roman Catholic
Apostolic faith within the territory of Davao are predominantly
Filipino citizens
presented evidence to establish that the clergy
and lay members of this religion fully covers the percentage of
Filipino citizens required by the Constitution
fact that the law thus expressly authorizes the corporations
sole to receive bequests or gifts of real properties (which were the
main source that the friars had to acquire their big haciendas
during theSpanish regime), is a clear indication that the requisite
that bequests or gifts of real estate be for charitable, benevolent,
or educational purposes, was, in the opinion of the legislators,
considered sufficient and adequate protection against the
revitalization of religious landholdings.
as in respect to the property which they hold for the
corporation, they stand in position of TRUSTEES and the courts
may exercise the same supervision as in other cases of trust

Republic v. T.A.N. Properties, Inc.[15] directs that

x x x x [T]he applicant for registration must present a copy of
the original classification approved by the DENR
Secretaryand certified as a true copy by the legal custodian of the
official records. These facts must be established to prove that the
land is alienable and disposable. Respondent failed to do so because
the certifications presented by respondent do not, by themselves,
prove that the land is alienable and disposable.[16] (emphasis and
underscoring supplied)
Respondent failed to comply with this directive. This leaves it
unnecessary to delve into the testimonies of petitioners predecessorsin-interest respecting their alleged possession of the subject
properties.