DOJ Opinion No. 103, s. 2002

DOJ OPINION NO. 103 , s. 2002 December 5, 2002 Undersecretary Gregory L. Domingo BOI Vice-Chairman & Managing Head Department of Trade and Industry Industry & Investments Building 385 Sen. Gil Puyat Avenue, Makati City Sir : This refers to your request for opinion as to whether the Board of Investments (BOI) may adopt other reasonable criteria in addition to those already provided for under Article 35 of the Omnibus Investments Code of 1987, particularly par. (h) thereof which you believe is a blanket authority for the Board to formulate and adopt such other reasonable criteria that may be considered in the evaluation of applications for registration of projects. Said Article 35 provides: "ART. 35. Criteria for Evaluation of Applications . The following criteria will be considered in the evaluation of applications for registration under a preferred area: a. The extent of ownership and control by Philippine citizens of the enterprises; b. The economic rates of return; c. The measured capacity: . . . d. The amount of foreign exchange earned, used or saved in their operations; e. The extent to which labor, materials and other resources obtained from indigenous sources are utilized; f. The extent to which technological advances are applied and adopted to local conditions; g. The amount of equity and degree to which the ownership of such equity is spread out and diversified; and h. Such other criteria as the Board may determine " (italics supplied) Specifically, you seek clarification on the adoption of a criterion disqualifying a prospective applicant corporation, one of the stockholders of which is a known violator of laws one who has a string of criminal, civil and administrative cases before judicial and administrative tribunals for offenses pertaining to the conduct of the activities sought to be registered such as submission of fictitious documents, misrepresentation, etc. Subject to the discussion hereunder, we rule in the affirmative. The Omnibus Investments Code of 1987 (Executive Order No. 226), Article 7, paragraph 3, insofar as pertinent, provides: "ART 7. Powers and Duties of the Board . xxx xxx xxx (3) Process and approve applications for registration with the Board, imposing such terms and conditions as it may deem necessary to promote the objectives of this Code , including refund of incentives when appropriate, restricting availment of certain incentives not needed by the project in the determination of the Board, requiring performance bonds and other guarantees, and payment of application, registration, publication and other necessary fees and when warranted, may limit the availment of the tax holiday incentive to the extent that the investor's country law or treaties with the Philippines allows a credit for taxes paid in the Philippines; xxx xxx xxx" It is clear from the foregoing provisions that not only has the Board been empowered to prescribe reasonable criteria as enumerated under Article 35 of the Investments Code, but it is likewise vested in explicit language with authority to impose such terms and conditions as it may deem necessary to promote the objectives of the Code in promoting an investment climate that encourages competition and discourages monopolies. Anent the phrase "such other criteria as the Board may determine", it is believed that the Board of Investments may impose other reasonable criteria that may be logically drawn from the purpose and object of the statute in ensuring that only bona fide corporate applicants may be admitted for registration. It bears emphasis that the Board does not perform a ministerial task in its duty of regulating and promoting investments in the Philippines. Corollarily, the word "regulate" means the power to control, to govern and to restrain [Philippine Law Dictionary (Second Edition)], which necessarily includes the power to approve or deny applications for registration as in the subject case. We find the criteria of disqualifying prospective applicant corporation where one of the stockholders has a string of criminal, civil and administrative cases before judicial or administrative tribunals reasonable and germane to the purpose of the Code. Well settled is the rule that every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms ( Gatchalian vs. Commission on Elections , 35 SCRA 435 [1970]) CIcEHS Please be guided accordingly. Very truly yours, (SGD.) MA. MERCEDITAS N. GUTIERREZ Acting Secretary