Category: LEGAL NOTES


LEGAL NOTE 0018: IS RPN 9 A GOVERNMENT-OWNED AND CONTROLLED CORPORATION?

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February 4, 2011

LEGAL NOTE 0018: IS RPN 9 A GOVERNMENT-OWNED AND CONTROLLED CORPORATION?

 SOURCE: ANTONIO M. CARANDANG VS. HONORABLE ANIANO A. DESIERTO, OFFICE OF THE OMBUDSMAN (G.R. NO. 148076); ANTONIO M. CARANDANG VS. SANDIGANBAYAN (FIFTH DIVISION) (G.R. NO. 153161) (12 JANUARY 2011, BERSAMIN, J.)

X ————————————————————————————————- X

 

IS RADIO PHILIPPINE NETWORK (RPN) A GOVERNMENT OWNED AND CONTROLLED CORPORATION?

 

NO.

Consequently, RPN was neither a government-owned nor a controlled corporation because of the Government’s total share in RPN’s capital stock being only 32.4%.

SANDIGANBAYAN ORDERED BENEDICTO TO TRANSFER HIS 72.4%  IN RPN TO RPN. DOES THIS MAKE RPN NOW A GOVERNMENT-OWNED AND CONTROLLED CORP?

 

NO. BECAUSE BENEDICTO FILED A MOTION FOR RECONSIDERATION WHERE HE CLARIFIED THAT THE SHARES CEDED TO RPN WAS ONLY 32.4%. SUCH MOTION IS NOT YET RESOLVED WITH FINALITY.

Parenthetically, although it is true that the Sandiganbayan (Second Division) ordered the transfer to the PCGG of Benedicto’s shares that represented 72.4% of the total issued and outstanding capital stock of RPN, such quantification of Benedicto’s shareholding cannot be controlling in view of Benedicto’s timely filing of a motion for reconsideration whereby he  clarified and insisted that the shares ceded to the PCGG had accounted for only 32.4%, not 72.4%, of RPN’s outstanding capital stock. With the extent of Benedicto’s holdings in RPN remaining unresolved with finality, concluding that the Government held the majority of RPN’s capital stock as to make RPN a government-owned or -controlled corporation would be bereft of any factual and legal basis.  

 

 

WHAT OTHER PROOF EXISTS  THAT RPN IS NOT AN OGCC?

 

EVEN OFFICE OF THE PRESIDENT AND PCGG RECOGNIZED RPN’S STATUS AS BEING NEITHER A GOVERNMENT-OWNED NOR CONTROLLED CORP. CONSTRUCTION OF A STATUTE BY GOVT AGENCIES DESERVE RESPECT.

 

Even the PCGG and the Office of the President (OP) have recognized RPN’s status as being neither a government-owned nor -controlled corporation.

In its Opinion/Clarification dated August 18, 1999, the PCGG communicated to San Luis as the president and general manager of RPN regarding a case involving RPN and Carandang:[1][29]

MR. EDGAR S. SAN LUIS

President & General Manager

Radio Philippines Network, Inc.

Broadcast City, Capitol Hills

Diliman, Quezon City

Sir:

This refers to your letter dated August 4, 1999, seeking “PCGG’s position on the following:

“1. Whether RPN-9 is a GOCC x x x or a private corporation outside the scope of OGCC and COA’s control given 32% Government ownership x x x.

x x x

It appears that under the RP-Benedicto Compromise Agreement dated November 3, 1990 – validity of which has been sustained by the Supreme Court in G.R. No. 96087, March 31, 1992, (Guingona, Jr. vs. PCGG, 207 SCRA 659) – Benedicto ceded all his rights, interest and/or participation, if he has any, in RPN-9, among others, to the government which rights, interest and/or participation per PCGG’s understanding, include 9,494,327.50 shares of stock, i.e, about 72.4% of the total issued and outstanding capital stock of RPN-9.

Accordingly, the Sandiganbayan (Second Division), on motion of the government through PCGG, ordered the president and corporate secretary of the RPN-9 to “effect the immediate cancellation and transfer of the 9,494,327.50 shares corresponding to Benedicto’s proprietary interest in RPN-9 to the Republic of the Philippines c/o PCGG” (Sandiganbayan’s Resolution of February 3, 1998 in Civil Case No. 0034, RP vs. Roberto Benedicto, et. al.) Benedicto, however, filed a motion for reconsideration of said Resolution, contending that the number of RPN-9 shares ceded by him embraces only his personal holdings and those of his immediate family and nominees totaling 4,161,207.5 shares but excluding the RPN-9 shares in the name of Far East Managers and Investors, Inc. (“FEMIE”), which is about 40%, as they are corporate properties/assets of FEMIE and not his personal holdings. Said motion for reconsideration is still pending resolution by the Sandiganbayan.

x x x

We agree with your x x x view that RPN-9 is not a government owned or controlled corporation within the contemplation of the Administrative Code of 1987, for admittedly, RPN-9 was organized for private needs and profits, and not for public needs and was not specifically vested with functions relating to public needs.

Neither could RPN-9 be considered a “government-owned or controlled corporation” under Presidential Decree (PD) No. 2029 dated February 4, 1986, which defines said terms as follows:

“Sec.2. Definition. – A government owned- or controlled corporation is a stock or non-stock corporation, whether performing governmental or proprietary functions which is directly chartered by special law or organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock;

Provided, that a corporation organized under the general corporation law under private ownership at least a majority of the shares of stock of which were conveyed to a government corporation in satisfaction of debts incurred with a government financial institution, whether by foreclosure or otherwise, or a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time, shall not be considered a government-owned or controlled corporation before such disposition and even if the ownership or control thereof is subsequently transferred to another government-owned or controlled corporation.”

A government-owned or controlled corporation is either “parent” corporation, i.e., one “created by special law” (Sec. 3 (a), PD 2029) or a “subsidiary” corporation, i.e, one created pursuant to law where at least a majority of the outstanding voting capital stock of which is owned by parent government corporation and/or other government-owned subsidiaries. (Sec. 3 (b), PD 2029).

RPN-9 may not likewise be considered as an “acquired asset corporation” which is one organized under the general corporation law (1) under private ownership at least a majority of the shares of stock of which were conveyed to a government corporation in satisfaction of debts incurred with a government financial institution, whether by foreclosure or otherwise, or (2) as a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time” (Sec 3 c, PD 2029), for the following reasons:

1.   as noted above, the uncontested (not litigated) RPN-9 shares of the government is only 32.4% (not a majority) of its capital stock;

2.   said 32.4% shares of stock, together with the contested/litigated 40%, were not conveyed to a government corporation or the government “in satisfaction of debts incurred with government financial institution, whether by foreclosure or otherwise;

3.   RPN-9 was not organized as a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith.

It should be parenthetically noted that the 32.4% or 72.4% shares of stocks were turned over to the government by virtue of a compromise agreement between the government and Benedicto in Civil Case No. 0034 which is “a civil action against Defendants Roberto S. Benedicto, Ferdinand E. Marcos, Imelda R. Marcos” and others, to recover from them ill-gotten wealth” (Amended Complaint, Aug. 12, 1987, Civil Case No. 0034, p. 2.) As the case between the government and Benedicto, his family and nominees was compromised, no judicial pronouncement was made as to the character or nature of the assets and properties turned over by Benedicto to the government – whether they are ill-gotten wealth or not.[2][30]    

The PCGG’s Opinion/Clarification was affirmed by the OP itself on February 10, 2000: [3][31]                     

                                                               February 10, 2000

Mr. Edgar S. San Luis

President and General Manager

Radio Philippines Network Inc.

Broadcasting City, Capitol Hills, Diliman

Quezon City

Dear President San Luis,

x x x

Relative thereto, please be informed that we affirm the PCGG’s opinion that RPNI is not a government-owned and/or controlled corporation (GOCC). Section 2 (13), Introductory Provisions of the Administrative Code of 1987 defines a GOCC as an agency organized as a stock or non-stock corporation vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the government directly or indirectly through its instrumentalities either wholly, or where applicable as in the case of stock corporations to the extent of at least 51% of its capital stock. As government ownership over RPNI is only 32.4% of its capital stock, pending the final judicial determination of the true and legal ownership of RPNI, the corporation is deemed private.[4][32]

Even earlier, a similar construction impelled the Ombudsman to dismiss a criminal  complaint  for violation of R.A. 3019 filed against certain RPN officials, as the Ombudsman’s resolution dated December 15, 1997 indicates,[5][33] a pertinent portion of which is quoted thus:

This is not to mention the fact that the other respondents, the RPN officials, are outside the jurisdiction of this Office (Office of the Ombudsman); they are employed by a private corporation registered with the Securities and Exchange Commission, the RPN, which is not a government owned or controlled corporation x x x[6][34]

Considering that the construction of a statute given by administrative agencies deserves respect,[7][35] the uniform administrative constructions of the relevant aforequoted laws defining what are government-owned or -controlled corporations as applied to RPN is highly persuasive.

[1][29] Rollo (G.R. No. 153161), pp. 66-72.

[2][30] Emphasis and underscoring supplied..

[3][31] Rollo (G.R. No. 148076), p. 358.

[4][32] Emphasis supplied.

[5][33] Rollo (G.R. No. 148076), pp. 634-638.

[6][34] Emphasis supplied.

[7][35] Philippine Amusement and Gaming Corporation (PAGCOR) v. Philippine Gaming Jurisdiction, Incorporated (PEJI), G.R. No. 177333, April 24, 2009, 586 SCRA 658, 667; Alfonso v. Office of  the President, G.R. No. 150091, April 2, 2007, 520 SCRA 64, 75; Delos Santos v. Court of Appeals, G.R. No. 147912, April 26, 2006, 488 SCRA 351, 359.

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LEGAL NOTE 0017: WHO IS HEIDI MENDOZA?

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February 3, 2011

The brave and courageous Heidi Mendoza

By Karen Galarpe, abs-cbnNEWS.com

Posted at 02/02/2011 3:54 PM | Updated as of 02/03/2011 9:40 AM

 

MANILA, Philippines – Her face is now splashed on news websites and newspapers, and mentioned in newscasts nationwide. Heidi Mendoza, former auditor of the Commission on Audit (COA), knew her days of living a quiet and anonymous life would come to an end as soon as she testified before the House of Representatives regarding anomalies in the military.

And so that quiet life did end yesterday as she spilled what she knew of anomalous transactions involving top generals of the Armed Forces of the Philippines.

Such a brave soul, this Heidi Mendoza is.

But who is she really?

On “The Rundown” last night on ANC, we were given a glimpse of this courageous woman.

A policeman’s daughter 

Mendoza is the daughter of a police officer, and is a reserve officer herself in the military with a rank of lieutenant colonel.

She finished her master’s degree in national security administration in 2003 at the National Defense College of the Philippines (NDCP).

After graduating from the NDCP, she was asked by former Ombudsman Simeon Marcelo to investigate anomalies in the Armed Forces of the Philippines (AFP).

 
Heidi Mendoza (right) during her graduation at the National Defense College of the Philippines in 2003 with then President Gloria Macapagal Arroyo (middle).

 She worked with the COA for more than 20 years and became an expert in fraud investigations of government transactions.

One case she audited was that of Atty. Zacaria A. Candao, a former governor of the Autonomous Region in Muslim Mindanao (ARMM), who was found to have committed malversation of P21 million in government funds.

According to Mendoza, she was offered money and property just so she will drop the case. Mendoza stood her ground and refused the offer.

The Supreme Court affirmed the conviction of Candao in 2010.

Why Heidi Mendoza came out with all guns blazing

By Leila B. Salaverria, Delfin Mallari Jr., Inquirer Southern Luzon
Philippine Daily Inquirer
First Posted 02:36:00 02/03/2011

Filed Under: Accounting and Audits, Military, Graft & Corruption, Civil & Public Services

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MANILA, Philippines—Talk that she would be blamed for a weak plunder case against former military comptroller Carlos Garcia prompted former state auditor Heidi Mendoza to speak out against the prosecutors’ decision to enter into a plea bargain deal with the retired major general.

This was according to former Ombudsman Simeon Marcelo, one of those whom Mendoza had consulted before she surfaced to tell the country that there was evidence to pin down Garcia.

Her elder sister said Mendoza’s decision to expose corruption in the military was simply living up to the final words of their father.

“Before our father died, the last message that he left to us was: ‘Huwag kayong kakain ng anuman na galing sa nakaw. Magtiis sa kahirapan at magtiyaga kung anuman ang mayroon sa buhay. (Don’t eat anything that came from theft. Bear poverty and whatever you have),’” said Mendoza’s sister, Gigi de Castro.

“No coercion and any form of harassment can break her will and no material things can tempt her to back out,” De Castro said in a phone interview on Wednesday from the nearby city of Tayabas in Quezon province.

Their father, Agapito Lloce Sr., a retired policeman, died in 1983 from a heart ailment and diabetes.

Mendoza, who led a team that audited military transactions between 2004 and 2006, testified in the plunder case against Garcia. She detailed a transaction involving a P200-million check, of which P50 million was unaccounted for.

Prosecutors earlier said that Mendoza’s testimony had been debunked by military personnel, who testified that the Armed Forces had been able to reconcile the discrepancy that the auditor found.

It was Mendoza who made up her mind to come out in the open, but she was not alone when she made that difficult choice, Marcelo said.

Ateneo support group

Marcelo said Mendoza’s husband, a group of friends from Ateneo de Manila University that included Fr. Bert Alejo, and members of nongovernment organizations were with Mendoza when she was weighing the pros and cons of speaking publicly.

The meeting took place at the Ateneo School of Governance in Makati City last month.

Before the meeting, Marcelo said he had been regularly in touch with Mendoza. He said Mendoza had been giving him words of support because he was speaking out against the plea bargain deal and as a result became a target of criticism.

Scapegoat

Some time last month, Mendoza called Marcelo up to relay what she was told—that there was talk that she would be among those to be blamed for the weak evidence against Garcia.

Marcelo and former Special Prosecutor Dennis Villa-Ignacio were the others who would be blamed for the weak case. “She told me, ‘what will happen? The public would not know the truth,’” Marcelo said.

Losing ADB job

Marcelo told Mendoza that she would have to decide for herself, since she could lose a very good job at the Asian Development Bank if she speaks up.

But Mendoza told Marcelo that she was having difficulty sleeping over the matter and then called for a meeting with friends.

At the meeting, the group talked about the risks of speaking out against the prosecutors’ stand that the case against Garcia was weak. The group also told her that coming out publicly was a decision that was hers to make alone.

Danger to family

One of the points raised at the meeting was that coming forward would have grave repercussions on Mendoza’s family.

Marcelo said he had pointed out that one of the witnesses in the plunder case against deposed President Joseph Estrada continued to have a guard even 10 years after the case. He said life for the witness was never the same even after the case was completed.

But Mendoza’s resolve to tell her story apparently outweighed the risks she could face. “She said, ‘If I don’t come out, it would be the same. I would never feel comfortable,”’ Marcelo narrated.

Talk with husband

Mendoza then took her husband aside and they talked. Afterward, she came up to the group and said she would speak up. She asked the group to help her with advice, with legal counsel and with security.

She also gave the go-signal for the airing of the first TV interview that she gave. She had agreed to the interview on the condition that it would not air until she says so.

Clan proud of Heidi

All of Lloce’s seven children—5 girls and 2 boys—hail from Tayabas at the foot of the mystical Mount Banahaw. Mendoza is the second to the youngest.

“Our father died with an unblemished record as a policeman. Heidi’s ongoing battle now against graft and corruption mirrors our father’s legacy. The whole clan is proud of her,” De Castro said.

Johnny Glorioso, dzMM news correspondent and long-time resident of Tayabas, remembered the elder Lloce as a member of the local police force.

“He is one fine example of an honest cop,” Glorioso said. “No wonder Heidi is now showing signs of the character of her late father.”

Lack of sleep

De Castro said she was able to talk with her younger sister on Tuesday evening.

“We all pity her. She’s now frail because of lack of sleep, tension and all,” she said, her voice trembling.

“She was very apologetic when she told me that all her family members should avoid making phone calls to her. That we should be contented with sending text messages but not so often. She’s really sorry that our lives will all be affected because of her current situation. But we all understand her,” De Castro added.

De Castro said, however, that she once asked Mendoza to stop her battle against influential and moneyed military officials for the safety of her own family but the advice was ignored.

Lots of blessings

De Castro remembered her sister’s response to her plea: “I have already received lots of blessings from the Lord. I could not turn my back on this little task that He assigned to me. I’m just His instrument to uphold the truth. What I have with me are documents, all products of my faithful investigation as a public servant.”

She said her sister, whom she described as courageous, intelligent and principled, reminded her that she was just obeying their father’s last message in his deathbed.

De Castro said her sister would not accept any form of gifts, not even fruits or gasoline money, and had been reluctant to give her calling card, especially to government officials with graft cases.

Valedictorian

Mendoza graduated valedictorian in her high school class in a private academy in Tayabas and obtained her college degree at Sacred Heart College in Lucena City.

She left Tayabas after her graduation in the early 1980s and immediately worked at the Commission on Audit. She married a college professor in a Manila university. They have three children, all college students, according to her sister.

Tayabas Vice Mayor Venerando Rea said Mendoza was often invited as a guest speaker at graduation rites in her hometown. He recalled that the last time he heard her give a graduation message was when she urged the graduating class to be honest in all their dealings in life.

Rea said the local government of Tayabas would adopt a resolution declaring its support for Mendoza.

 

 
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LEGAL NOTE 0016: VERIFICATION AND CERTIFICATION ON NON-FORUM SHOPPING.

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January 31, 2011

LEGAL NOTE 16: VERIFICATION AND CERTIFICATION ON NON-FORUM SHOPPING

 SOURCE:      SOUTH COTABATO COMMUNICATIONS CORPORATION and GAUVAIN J. BENZONAN  vs. HON. PATRICIA A. STO. TOMAS, SECRETARY OF LABOR AND EMPLOYMENT, ROLANDO FABRIGAR, MERLYN VELARDE, VINCE LAMBOC, FELIPE GALINDO, LEONARDO MIGUEL, JULIUS RUBIN, EDEL RODEROS, MERLYN COLIAO and EDGAR JOPSON (G.R. NO. 173326, 15 DECEMBER 2010)

 

IF THE PRESIDENT SIGNS THE REQUIRED VERIFICATION AND CERTIFICATION AGAINST NON-FORUM SHOPPING IS HE REQUIRED TO PRODUCE A BOARD RESOLUTION.

NO.

Anent the first procedural issue, the Court has summarized the jurisprudential principles on the matter in Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue.[1][15]  In said case, we held that a President of a corporation, among other enumerated corporate officers and employees, can sign the verification and certification against of non-forum shopping in behalf of the said corporation without the benefit of a board resolution.  We quote the pertinent portion of the decision here:

It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code, clearly enunciates that all corporate powers are exercised, all business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA, we recognized the authority of a general manager or acting general manager to sign the verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an “employment specialist” who had not even presented any proof of her authority to represent the company; in Novelty Philippines, Inc. v. CA, we ruled that a personnel officer who signed the petition but did not attach the authority from the company is authorized to sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the Company can sign the verification and certificate against non-forum shopping even without the submission of the board’s authorization.

 

IN SUMMARY, WHO ARE THE OFFICIALS OF THE COMPANY WHO CAN SIGN THE VERIFICATION AND CERTIFICATION WITHOUT NEED OF A BOARD RESOLUTION?

In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules, the determination of the sufficiency of the authority was done on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the corporation to sign the verification or certificate against forum shopping, being “in a position to verify the truthfulness and correctness of the allegations in the petition.”[2][16] (Emphases supplied.)

 

IS THE REQUIRED CERTIFICATION ON NON-FORUM SHOPPING JURISDICTIONAL?

NO.

Nonetheless, under the circumstances of this case, it bears reiterating that the requirement of the certification of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora, as this practice is detrimental to an orderly judicial procedure.  However, the Court has relaxed, under justifiable circumstances, the rule requiring the submission of such certification considering that, although it is obligatory, it is not jurisdictional.  Not being jurisdictional, it can be relaxed under the rule of substantial compliance.[3][18]

[1][15]          G.R. No. 151413, February 13, 2008, 545 SCRA 10.

[2][16]          Id. at 17-19.

[3][18]          PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSDWO) v. PNCC Skyway Corporation, G.R. No. 171231, February 17, 2010.

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