DOJ Opinion No. 036, s. 1981

DOJ OPINION NO. 036 , s. 1981 2nd Indorsement February 20, 1981 Respectfully returned to Governor H. Zayco, Board of Investments, Makati, Metro Manila, the within request of Mr. Abdugafar Rasul, Provincial Trade Promotion and Regulation Office in Zamboanga City of the Bureau of Domestic Trade, for "information as to whether or not an alien may be entrusted, thru a 'power of attorney', [with] general control, management and supervision over all the affairs of a business entity which is wholly-owned by a Filipino citizen, engaged in stevedoring, hauling and trucking activities", which request that Board has referred to this Ministry "for appropriate action." The accompanying papers disclose that Mr. William Bahani, a Filipino citizen, is the registered owner of 'William Hauling and Stevedoring' and "William Trucking", which are engaged in the stevedoring, hauling and trucking business; that on August 19, 1977, he executed a power of attorney in favor of Mr. Eduardo Go, a Chinese national, empowering the latter, inter alia , to "exercise general control, management and supervision over all the business affairs of William Stevedoring and hauling"; and that Mr. Go took over the management of said firm without first securing "the necessary written authority from the Board" [of Investments (BOT)]; and that Mr. Rasul submitted the within query to that Board "in connection with the implementation of Republic Act No. 5455". We take it, therefore, that what you would want to know is whether Mr. Go may take over the management of subject business without first securing the written authority required by R.A. 5455, entitled "An Act To Require That The Making Of Investments And The Doing Of Business With The Philippines By Foreigners Or Business Organizations Owned In Whole Or In Part By Foreigners Should Contribute To The Sound And Balanced Development Of The National Economy On A Self-Sustaining Basis, And For Other Purposes." LexLib However, we believe that before that present query may be resolved there must first be decided the prejudicial question of whether the subject stevedoring, hauling and trucking business is a public utility and therefore a nationalized business within the purview of the constitutional provision limiting the operation of public utilities to citizens of the Philippines and to corporations or associations at least sixty per centum of the capital of which is owned by such citizens (Art. XIV, Sec. 5, New Constitution). Subject to the extended discussion set forth hereunder, we are of the opinion that subject business is a public utility, the operation of which should be limited to citizens of the Philippines pursuant to the above-cited constitutional provision, for which reason Mr. Go, the Chinese attorney-in-fact in the present case, may not engage in the general control, management and supervision of said business without violating the above-said constitutional injunction. It has been held that an interstate trucking company operating by authority of law upon public highways as a common carrier in interstate commerce and devoting its equipment solely for the purpose of carrying freight was a public utility. (Motor Cargo, Inc. vs. Board of Trustees of Richfield Tp., Ohio Com Ph., 117 N.E. 2d. 224). Likewise, the Supreme Court has held that stevedoring, which is the carriage of goods from warehouse or pier to the holds of the vessel, is a necessary operation in the transportation of goods by sea (Chief of Staff, AFP vs. Collector of Internal Revenue, 20 SCRA 1100). Finally, it is settled that the "hauling" of goods is in the category of a transportation undertaking. (19 Words and Phrases 81) It is thus clear that the subject business of stevedoring, hauling and trucking is a public utility or a public service within the within the contemplation of the definition of said term in the Public Service Act (Commonwealth Act No. 146, as amended) to wit: "Sec. 13 (b) The term 'public service' includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way, mother vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line pontines, ferries, and small water craft, engaged in the transportation of passengers and freight, shipyard, marine railway, marine repair shop, warehouse, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation, system, sewerage, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, telephone, wire or wireless telegraph system and broadcasting radio stations." By the terms of the subject power of attorney, Mr. Go has been authorized to exercise " general control, management and supervision over the business affairs of William Stevedoring and hauling. Judging from the extent of Mr. Go's delegated authority, he is not an ordinary officer of the enterprise. The delegation is so broad and all encompassing that it makes him the virtual operator of the firm, its fortunes largely if not fully dependent upon his decision. The subject power of attorney even empowers him "to sell and dispose [of] any property of the business at any sum or consideration deemed by [the] attorney-in-fact to be sufficient." This means that the powers conferred upon him embrace not only acts of administration, but acts of ownership as well. Therefore, if Mr. Go were allowed to act operating a public utility, the very act from which the Constitution, by virtue of the aforesaid provision, excludes aliens. In this connection, it is noteworthy to consider the provision of the Anti-Dummy Law, CA No. 108 as amended by P.D. No. 715, which provides: "Sec. 2-A. Any person, corporation, or association which, having in its name or under its control, a right, franchise, privilege, property or business, the exercises or enjoyment of which is expressly reserved by the Constitution of the laws to citizens of the Philippines . . . permits or allows, the use, exploitation or enjoyment thereof by a person, corporation or association not possessing the requisites prescribed by the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or conveys said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under the Constitution, or the provision of the existing laws, or in any manner permits or allows any person, not possessing the qualification required by the Constitution or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of which are expressly reserved by the Constitution or existing laws to citizens of the Philippines or of any other specific country, to intervene in the management operation, administration or control thereof, whether as an officer, employee or laborer therein with or without remuneration except technical personnel whose employment may be specifically authorized by the Secretary of Justice ; and any person who knowingly aids, assists, or abets in the planning, consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for not less than five or more than fifteen years and by a line of not less than the value of the right, franchise or privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos, Provided, however, That the president, managers or persons in charge of corporations, associations or partnerships violating the provisions of this section shall be criminally liable in lieu thereof: Provided, further, That any persons, corporation or association shall, in addition to the penalty imposed herein, forfeit such rights, franchise, privilege, and the property or business enjoyed or acquired in violation of the provisions of this Act; and Provided finally, That the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such activities." (Emphasis ours) This Ministry in Opinion No. 86, s. 1976 ruled that the Anti-Dummy Law penalizes the intervention of aliens in the management, operation, administration or control of the nationalized enterprise or activity. LexLib Excepted from this rule is the case where the alien is equity participant in said entities. This exception is specifically sanctioned by the latest amendment to the Anti-Dummy Law (P.D. No. 715) which provides "that the election of aliens as members of the board of directors or governing body of corporations or associations engaged in partially nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such entities." This exception finds no application in this case. Wherefore, without finding it necessary to go into the matter of the required BOI certification under RA 5455, we are of the opinion that your query should be answered in the negative: an alien may not be entrusted with general control, management and supervision over all the affairs of a Filipino business entity engaged in stevedoring, hauling and trucking activities, the subject business being in the nature of a public utility, the operation of which is limited by the Constitution to Filipino citizens. Please be guided accordingly. (SGD.) RICARDO C. PUNO Minister of Justice