DOJ Opinion No. 037, s. 1976

DOJ OPINION NO. 037 , s. 1976 2nd Indorsement February 26, 1976 Respectfully returned to Presidential Assistant Juan C. Tuvera, Office of the President, Malacaang, Manila. Goodyear Tire & Rubber Co. of the Philippines, Ltd., requests reconsideration of the opinion expressed by the undersigned in his letter to NDC Chairman, Constante Farias, dated September 24, 1975, to the effect "that while P.D. No. 715 allows aliens to be elected as directors of corporations engaged in partially nationalized activities, the prohibition in Section 2-A of the Anti-Dummy Law against the employment of aliens in any capacity, i.e., control or non-control positions, still remains and is applicable even to the alien directors to represent alien stockholders in the corporation". The accompanying papers disclose that Goodyear Tire & Rubber Co. donated to the National Development Co. 60% of its undivided interest in two parcels of land located in Las Pias, Rizal; that these two companies in turn transferred and conveyed their respective undivided shares in these lots in exchange for shares of stock of GY Real Estate, Inc.; and that of the five members of the realty firm's board of directors, two are Americans, both of whom were elected officers of the corporation as president and treasurer thereof. With the issuance of the above-mentioned opinion, which was rendered with respect to the election of officers in the Batangas Land Co., the NDC Chairman has suggested a meeting of the Board of Directors of GY Real Estate, Inc. to elect Filipino officers for the firm. Hence, this request for reconsideration. LexLib Section 2-A of the Anti-Dummy Law, C.A. No. 108 as amended, reads as follows: "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 exercise or enjoyment of which is expressly reserved by the Constitution of the laws to citizens of the Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, 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 provisions of the existing laws; or in any manner permits or allows any person, not possessing the qualifications 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 nor more than fifteen years and by a fine 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 person, corporation or association shall, in addition to the penalty imposed herein, forfeit such right, 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) The final proviso was added by P.D. No. 715. It is argued that with the enactment of P. D. No. 715, expressly allowing aliens to be elected directors of entities engaged in partially nationalized activities, the prohibition against the intervention of such directors in the management, operation, administration and control of said entities and their employment "whether as an officer, employee, or laborer" in such enterprises, should be deemed modified by the said decree. I do not think so. A reading of Section 2-A readily reveals the legislative intent to complement our nationalization laws by closing any avenue whereby aliens may defeat their purpose [King vs. Hernaez, 4 SCRA 792, (1962)]. It penalizes the employment of aliens in any position pertaining to management, operation, administration and control, "whether as an officer, employee, or laborer therein", which means that the employment of a person who is not a Filipino citizen even in a minor or clerical or non-control position is prohibited. The enactment of P.D. No. 715 merely introduced an exception to this prohibition, by allowing the election of aliens as directors of entities engaged in partially nationalized activities, to represent the limited alien participation in the equity of such firms. As such an exception, the proviso added by P.D. No. 715, must, by settled rules of statutory construction, be strictly construed. [Salaysay vs. Castro, 96 Phil. 364 (1956).] Had the amendment been intended to except alien directors from the general prohibition against the employment of aliens in corporations or entities engaged in partially nationalized activities and to allow their intervention in the management of said entities as officers thereof, the proviso would have been so worded to express that purpose. As it is, P.D. No. 715 was merely intended to give alien stockholders "limited representation" in the governing board in proportion to their equity (see 2nd whereas clause). The suggested interpretation would expand the meaning of the proviso beyond its normal connotation. In arriving at this conclusion, I am guided by the underlying intent behind the nationalization of employment provided for in the Anti-Dummy Law, which is to eradicate the shackles of foreign economic control and domination in the country". [King vs. Hernaez, supra, at p. 804; Universal Corn Products, Inc. vs. Rice and Corn Board, 20 SCRA 1048 (1967).] In view whereof, I cannot reconsider my previous ruling to the effect that aliens who are elected directors of corporations or associations engaged in partially nationalized activities may not hold any other position in the said entity. LexLib (SGD.) VICENTE ABAD SANTOS Secretary of Justice