Bar Q and A #40

(a) No, T’s contention is not correct. Succession in local government offices is by operation of law. Section 44 of Republic Act No. 7160, otherwise known as the Local Government Code, provides that if a permanent vacancy occurs in the office of the vice mayor, the highest ranking sanggunian member shall become vice mayor (Montebon v. Commission on Elections, G.R. No. 180444, April 8, 2008).

(b) R can still run for the position of Municipal Councilor. Voluntary renunciation of a term does not cancel the renounced term in the computation of the three-term limit; conversely, involuntary severance from office for any length of time short of the full term provided by law amounts to an interruption of continuity of service (Montebon v. Commission on Elections, G.R. No. 180444, April 8, 2008).

a. In accordance with Section 69 of the Local Government Code, the Governor can berecalled for loss of confidence.

b. Under Section 70 of the Local Government Code, the recall may be initiated by a resolution adopted by a majority of all the members of the preparatory recall assembly, which consists of all the mayors, the vice-mayors, and the sangguniang members of the municipalities and component cities, or by a written petition signed by at least twenty-five per cent (25%) of the total number of registered voters in the province.

c. According to Section 72 of the Local Government Code, the recall of an elective local official shall take effect upon the election and proclamation of a successor in the person of the candidate receiving the highest number of votes cast during the election on recall.

According to Manila Prince Hotel v. Government Service Insurance System, 267 SCRA 408, the national patrimony refers not only to our natural resources but also to our cultural heritage.

a. If the projected lawsuit will be based on violation of the rights of the indigenous cultural communities, the Philippine Environmentalists Organization will have no standing to file the case. None of its officers and members belong to the indigenous cultural community. None of their rights are affected.

If the lawsuit will seek to enjoin the use of public funds to operate the power plant, the Philippine Environmentalists’ Organization, can file a taxpayer’s suit. As held in Maceda vs. Macaraig,
197 SCRA 771, a taxpayer has standing to question the illegal expenditure of public funds.

b. The Philippine Environmentalists Organization will have no standing to file the case if it is a private company that will operate the power plant, because no public funds will be spent for its operation. As held in Gonzales vs. Marcos, 65 SCRA 624, a taxpayer has no standing to file a case if no expenditure of public funds is involved.

a. At least sixty per cent (60%) of the equity of the entities engaged in the followingbusiness must be owned by Filipino citizens under the Constitution.

i. Co-production, joint venture, or production sharing agreement with the State for the exploration, development, and utilization of natural resources (Section 2, Article XII)
ii. Operation of a public utility
(Section 11, Article XII)
iii. Education (Section 4(2), Article XIV)
b. At least seventy percent (70%) of the equity of business entities engaged in advertising must be owned by Filipino citizens under the Constitution. (Section 11(2), Article XVI)
c. Mass media must be wholly owned by Filipino citizens under the Constitution (Section 11(1), Article XVI)

2. Under the Constitution, aliens may acquire equity but cannot participate in the management of business entities engaged in the following activities:

a. Public utilities (Section 11, Article XII)
b. Education (Section 4(2), Article XIV)
c. Advertising (Section 11(2), Article XVI)

“The application of the Grandfather Rule is justified by the circumstance of the case to determine the nationality of petitioners. The use of the Grandfather Rule as a “Supplement” to the Control Test is not Prescribed by the Constitution…” “The grandfather Rule, standing alone, should not be used to determine the Filipino ownership and control in a corporation, as it could result in an otherwise foreign corporation rendered qualified to perform nationalized or partly nationalized activities. Hence, 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. 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 exists as to the locus of the “beneficial ownership” and “control” (Narra Nickel Mining and Development Corporation v. Redmont Consolidated Mines Corporation, G.R. No. 195580, January 28, 2015).

PSALM is correct. Foreign ownership of a hydroelectric power plant is not prohibited by the Constitution. PSALM will not retain ownership of the Angat Dam. Angat Dam will trap the natural flow of water from the river. The water supplied by PSALM will then be used for power generation. Once the water is removed from its natural source, it ceases to be part of the natural resources of the Philippines and may be acquired by the foreigners (Initiatives for Dialogue vs. Power Sector Assets and Liabilities Management Corp., 2012).

The term “capital” mentioned in Sec. 11, Art. XII of the Constitution refers to the total outstanding capital stock of public utilities. The requirement that at least sixty percent of the capital must be owned by Filipino citizens applies separately to each class of shares, whether common, preferred non-voting, preferred voting, or any class of shares. Mere legal title is not enough. Full beneficial ownership of sixty percent of the outstanding capital stock is required. (Gamboa v. Teves, 652 SCRA 690, [2011])

The government cannot deny the bank its right as owner of the mineral resources underneath the surface of the property. The mining rights acquired under Philippine Bill of 1902 before the effectivity of the 1935 Constitution were vested rights that cannot be impaired by the Government (Yinhu Bicol Mining Corporation v. Trans-Asia Oil and Energy Development Corporation, G.R. No. 207942, January 12, 2015, 745 SCRA 154).