Australian-listed Celsius Resources Ltd. has filed a criminal complaint before the Department of Justice (DOJ) against its former executive chairman, Atty. Julito “Sarge” R. Sarmiento, for allegedly helping set up a scheme that allows foreign investors to control a Philippine mining firm.
In a complaint-affidavit filed on July 31, Celsius accused Sarmiento of violating Section 2-A of Commonwealth Act No. 108, or the Anti-Dummy Law, which penalizes individuals who knowingly aid, assist, or participate in planning arrangements designed to circumvent restrictions on foreign ownership. The offense carries a penalty of five to 15 years of imprisonment.
The complaint centers on an email dated January 17 that was allegedly sent from Sarmiento’s account at Sarmiento Loriega Law Office (SL Law), where he is a founding and co-managing partner, to executives of India-based Kiri Industries Ltd. and a director of Makilala Mining Company Inc. (MMCI).
According to Celsius, the email outlined a proposed Philippine holding company that would establish special-purpose vehicles for various industries, with mining listed as the first sector.
For entities subject to the 60% Filipino ownership requirement, the email allegedly stated that the majority stake would be held by “trusted Filipinos,” including partners of SL Law, who would sign deeds of trust and undated deeds of assignment to allow the foreign client to retain full control of the entity.
Celsius described the proposed arrangement as an attempt to circumvent the Anti-Dummy Law, citing Supreme Court rulings that require Filipino ownership to involve genuine beneficial ownership and voting rights rather than merely legal title to shares.
The holding company was registered with the Securities and Exchange Commission (SEC) on June 5. Corporate records cited in the complaint reportedly show that a Singaporean entity owns 99.9998% of the company, with Sarmiento listed as one of its three incorporators and directors.
Dispute over mining venture
Celsius holds a 40% stake in MMCI, which is developing the MCB copper-gold project in Kalinga.
The company said its investment was put at risk following a series of corporate changes that began at an April 20 stockholders’ meeting, during which all five board seats were declared vacant.
Sarmiento was subsequently reinstated as chairman and president as the nominee of the majority shareholder, while the remaining board positions were filled by lawyers from SL Law, according to Celsius.
The company also alleged that law firm personnel were appointed to MMCI’s management, corporate records were transferred from the company’s principal office to the firm’s premises, and its access to those records was restricted.
Celsius said it had raised the issue of access to corporate records with the SEC.
Meanwhile, a Kiri-affiliated entity that took over MMCI’s loan from Maharlika Investment Corp. reportedly declared a default and initiated foreclosure proceedings involving Celsius’ 40% stake in the mining venture.
An auction for the stake had been scheduled for August 10, according to the company.
Separate complaints against Celsius directors
The dispute has also led to separate Anti-Dummy Law complaints against Celsius directors filed by parties aligned with the majority shareholder. Celsius said its directors were preparing counter-affidavits in response.
Sarmiento has not publicly responded to the complaint, according to the press release.
The DOJ has yet to determine whether probable cause exists to pursue the case.
The allegations against Sarmiento have not been proven in court.
