Case Digest (G.R. No. 195580)
Facts:
Petitioners Narra Nickel Mining and Development Corp., Tesoro Mining and Development, Inc., and McArthur Mining, Inc. sought review under Rule 45 from the Court of Appeals' October 1, 2010 decision in CA-G.R. SP No. 109703, which held that they were foreign corporations not entitled to Mineral Production Sharing Agreements (MPSAs). The Court denied the petition in an April 21, 2014 Decision, prompting a Motion for Reconsideration filed June 5, 2014; the Court, noting that an FTAA earlier issued to petitioners was revoked and that substantial doubt existed about petitioners' nationality because MBMI effectively furnished most paid capital through multi-tier shareholdings, denied the motion on January 28, 2015 with finality.
Issues:
- Is the case moot or academic by reason of the later issuance (and revocation) of an FTAA and alleged divestment by MBMI?
- May the Grandfather Rule be applied, together with the Control Test, to ascertain the nationality of corporations for purposes of Section 2, Article XII of the Constitution?
- Did the Panel of Arbitrators of the DENR have jurisdiction to resolve the nationality issue as part of a dispute over rights to mining areas under Section 77 of RA 7942?
Ruling:
The Court denied the Motion for Reconsideration and affirmed its April 21, 2014 Decision and the appellate rulings that petitioners were foreign corporations not entitled to MPSAs. The Court held that the case was not rendered moot by the FTAA issuance (which was later revoked) or by the alleged post‑litigation share transfers. The Court also held that the Grandfather Rule may be applied as a supplement to the Control Test when reasonable doubt exists as to beneficial ownership and that the DENR Panel of Arbitrators has jurisdiction to make a preliminary determination of nationality insofar as it is necessary to resolve disputes involving rights to mining areas under Section 77 of RA 7942.
Ratio:
The Court applied the recognized exceptions to the mootness doctrine because the controversy implicated a grave constitutional provision, involved exceptional facts of public concern, required formulation of controlling principles on Filipino ownership of natural resources, and was capable of repetition yet evading review. On nationality, the Court explained that the Control Test remains primary, but where indicia raise doubt that Filipinos possess beneficial ownership and control—for example, where a foreign entity funded virtually all paid capital while nominal Filipino shareholders paid nothing—the Grandfather Rule may be invoked to attribute stock through corporate layers and reveal true beneficial ownership; this approach is supported by SEC, DOJ, and BIR rulings and this Court's precedents. Finally, the Court construed Section 77, RA 7942 and Celestial to permit the DENR Panel of Arbitrators to make preliminary findings on nationality as an incident of resolving adverse claims to mining areas.
Doctrine:
- The mootness doctrine yields where a case presents a grave constitutional violation, exceptional public interest, a need for controlling principles, and a risk of repetition yet evading review.
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