DOJ Opinion No. 082, s. 1983

DOJ OPINION NO. 082 , s. 1983 May 26, 1983 Mr. Teodoro C. Rey, Jr. General Manager Laguna Lake Development Authority 3rd Floor, Rizal Provincial Capitol Pasig, Metro Manila Sir : This is with reference to your request for opinion on what constitutes "inter-locking ownership" as prohibited under Sec. 4, par. (e) of LLDA Board Resolution No. 9, series of 1976, governing the construction and operation of fishpens or fish enclosures in Laguna de Bay. Said Section 4, provides as follows: "Section 4. Restrictions . . . . (e) No permit shall be issued to any individual owning more than 5% of the total interest or subscribed capital stock more than two (2) corporations, associations, partnerships, cooperatives or other aggrupations in whose favor a fishpen permit has been duly issue. Neither shall a permit be issued to any corporation, association, partnership, cooperative or other aggrupation owning more than 10% of the total interest or subscribed capital stock in more than two (2) other corporations, associations, partnership, cooperatives or other aggrupations in whose favor a fishpen permit has been duly issued, or any of whose stockholders/members owns more than 5% of the total interest or subscribed capital stock of more than two (2) other corporations, associations, partnerships, cooperatives or other aggrupations in whose favor a fishpen permit has been duly issued; Provided , That the foregoing restrictions shall not apply to government owned or controlled corporations." prcd At the outset, it is observed that the above rules were promulgated by the LLDA Board, which ought to be in a better position than this office to interpret the policies it has promulgated to guide the issuance of permits to construct and operate fishpens. However, we are commenting on the above-quoted rule on the basis of our interpretation from a bare reading thereof. The rule defines the following as instances of interlocking ownership: 1. When an individual owns more than 5% of the total interest or subscribed capital stock of more than two(2) corporations, associations, partnerships, cooperatives or other aggrupations in whose favor a fishpen permit has been duly issued; 2. When a corporation, association, partnership, cooperative or other aggrupation owns more than 10% of the total interest or subscribed capital stock in more than 10% of the total interest or subscribed capital stock in more than two (2) other corporations, associations, partnerships, cooperatives or other aggrupations in whose favor a fishpen permit has been duly issued; 3. When any of the stockholders/members of the corporation, association, partnership, cooperative or other aggrupation owns more than 5% of the total interest or subscribed capital stock or more than two (2) other corporations, association, partnerships, cooperatives or aggrupations in whose favor a fishpen permit has been duly issued. The above situations are best explained by the following illustrations: Situation A. Individual A is subscriber to the capital stock of corporations B, C and D (more than two (2) Corporations), who were issued fishpen permits, and whose total subscribed capital stock amounts to P 100,000.00. If a desires to apply for a fishpen permit he should limit his subscription to 5% of the total subscribed capital stock corporations B, C and D of P100,000.00, i.e. he should not own more than P5,000.00 interest or subscribed capital stock of the permit corporations. Individuals A becomes ineligible for a fishpen permit once his subscriptions in the total subscribed capital stock of corporations B, C and D and other corporations, goes beyond P 5,000.00. prcd Situation B. Corporation A is a subscriber to the capital stock of corporations B, C and D (more than two corporations) whose total subscribed capital stock amounts to P100,000.00. If said Corporation A desires to apply for a fishpen permit to should limit its subscription to 10% of the total subscribed capital stock of corporations B, C and D of P100,000.00, i.e. 10% of P100,000. or P 10,000. Corporation A becomes ineligible for a fishpen to the total subscribed capital stock of corporations B, C and D goes beyond P 10,000.00. Situation C. Corporation A desires to apply for a fishpen permit. Some of the stockholders of Corporation A are also stockholders of Corporations B, C and D (more than two (2) corporations) the total subscribed capital stock of which 3 corporations amounts to P100,000.00. For Corporation A to be eligible for a fishpen permit, none of its stockholders should own more than 5% (or P5,000) of the total subscribed capital stock (P100,000.00) of corporations B, C and D. Corporation A becomes ineligible for a fishpen permit any of its stockholders owns more than P5,000.00 of the total subscribed capital stock P100,000.00 of Corporations B, C and D. In this connection, it is observed that the inter-locking ownership described above does not appear to be prohibited by the rule. The presence of inter-locking ownership merely renders the individual or corporation as the case may be ineligible for a fishpen permit. Please be guided accordingly. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice