Political Law Bar Q and A

Political Law Bar Questions and Answers

Bar Q and A #40

1.) R was elected as Municipal Councilor for three (3) consecutive terms. Before the end of the third term, Vice Mayor S died, rendering his post vacant. Since R was the highest-ranking Municipal Councilor, he assumed the office of the Vice Mayor. One of his constituents, T, assailed R’s assumption of office, arguing that elections should have been conducted to fill in the vacancy following the death of Vice Mayor S. (a) Is T’s contention correct? Explain. (b) Assuming that R validly assumed S’s post, at the end of R’s term as Vice Mayor, may he run, once more, for the position of Municipal Councilor? Or, is he prescribed to do so under the Local Government Code? Explain.

(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).

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2.) The Province of Amaya is one of the smallest provinces in the Philippines with only one legislative district composed of four municipalities: Uno, Dos, Tres, and Cuatro. Andres, a resident and registered voter of Cuatro municipality, ran and was elected as member of the Sangguniang Panlalawigan (SP) of Amaya in the 2010 and 2013 local elections. While Andres was serving his second term as •sp member, a law was enacted re-apportioning the four towns of Amaya into two legislative districts: Uno and Dos comprising the First District, and Tres and Cuatro comprising the Second District. In the 2016 local elections, Andres ran and was elected as member of the SP of Amaya representing the Second District. Andres seeks your legal advice regarding his intention to run as a member of the SP of Amaya for the Second District in the next local elections in 2019. What will you advise Andres?

My advise is for him not to run for SP member, because doing so violates the limitation of three consecutive terms upon local elective officials. In the cases of Latasa v. COMELEC (G.R. 154289, December 10, 2003) and Naval v. COMELEC (G.R. No. 207851, July 8,

2014]), the Court ruled that the three-term limit applies notwithstanding any reapportionment, renaming, or reclassification of any local government unit. The clear intent of the framers of the Constitution was to limit the term to three consecutive elections to the same position.

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3.) Suppose the people of a province want to recall the provincial governor before the end of his three-year term of office. a. On what ground or grounds can the provincial governor be recalled? b. How will the recall be initiated? c. When will the recall of an elective local official be considered effective?

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.

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4.) What is meant by National Patrimony? Explain the concept of National Patrimony?

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.

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5.) The Philippine Environmentalists’ Organization for Nature, a duly recognized nongovernmental-organization, intends to file suit to enjoin the Philippine Government from allocating funds to operate a power plant at Mount Tuba in a southern island. They claim that there was no consultation with the indigenous cultural community which will be displaced from ancestral lands essential to their livelihood and indispensable to their religious practices. a. The organization is based in Makati. All its officers live and work in Makati. Not one of its officers or members belong to the affected indigenous cultural community.Do they have the standing in this dispute? Explain. b. Would your answer be different if the Philippine Power Corporation, a private company, were to operate the plant? Explain.

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.

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6.) 1. Give a business activity the equity of which must be owned by Filipino citizens: a. at least 60% b. at least 70% c. 100% 2. Give two cases in which aliens may be allowed to acquire equity in a business activity but cannot participate in the management thereof?

1.
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)

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7.) BD Telecommunications, Inc. (BDTI), a Filipino-owned corporation, sold its 1,000 common shares of stock in the Philippine Telecommunications Company (PTC), a public utility, to Australian Telecommunications (AT), another stockholder of the PTC which also owns 1,000 common shares. A Filipino stockholder of PTC questions the sale on the ground that it will increase the common shares of AT, a foreign company, to more than 40% of the capital (stock) of PTC in violation of the 40% limitation of foreign ownership of a public utility. AT argues that the sale does not violate the 60-40 ownership requirement in favor of Filipino citizens decreed in Section II, Article XII of the 1987 Constitution because Filipinos still own 70% of the capital of the PTC. AT points to the fact that it owns only 2,000 common voting shares and 1,000 non-voting preferred shares while Filipino stockholders own 1,000 common shares and 6,000 preferred shares, therefore, Filipino stockholders still own a majority of the outstanding capital stock of the corporation, and both classes of shares have a par value of Php 20.00 per share. Decide.

“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).

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8.) Pursuant to its mandate to manage the orderly sale, disposition and privatization of the National Power Corporation's (NPC) generation assets, real estate and other disposable assets, the Power Sector Assets and Liabilities Management (PSALM) started the bidding process for the privatization of Angat Hydro Electric Power Plant (AHEPP). After evaluation of the bids, K-Pop Energy Corporation, a South Korean Company, was the highest bidder. Consequently, a notice of award was issued to K-Pop. The Citizens' Party questioned the sale arguing that it violates the constitutional provisions on the appropriation and utilization of a natural resource which should be limited to Filipino citizens and corporations which are at least 60% Filipino-owned. The PSALM countered that only the hydroelectric facility is being sold and not the Angat Dam; and that the utilization of water by a hydroelectric power plant does not constitute appropriation of water from its natural source of water that enters the intake gate of the power plant which is an artificial structure. Whose claim is correct? Explain.

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).

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9.) Sec. 11 of Art. XII of the Constitution provides: “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 x x x.” Does the term “capital” mentioned in the cited section refer to the total common shares only, or to the total outstanding capital stock, or to both or “separately to each class of shares, whether common, preferred non- voting, preferred voting or any class of shares?” Explain your answer.

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])

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10.) A bank acquired a large tract of land as the highest bidder in the foreclosure sale of the mortgaged assets of its borrower. It appears that the land has been originally registered under the Torrens system in 1922 pursuant to the provisions of the Philippine Bill of 1902, the organic act of the Philippine Islands as a colony of the USA. Sec. 21 of the Philippine Bill of 1902 provided that "all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the land in which they are found to occupation and purchase, by citizens of the United States, or of said Islands." Sec. 27 of the law declared that a holder of the mineral claim so located was entitled to all the minerals that lie within his claim, but he could not mine outside the boundary lines of his claim. The 1935 Constitution expressly prohibited the alienation of natural resources except agricultural lands. Sec. 2, Art. XII of the 1987 Constitution contains a similar prohibition, and proclaims that all lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. This provision enunciates the Regalian Doctrine. May the Government, on the basis of the Regalian Doctrine enunciated in the constitutional provisions, deny the bank its right as owner to the mineral resources underneath the surface of its property as recognized under the Philippine Bill of 1902? Explain your answer.

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).

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