DOJ Opinion No. 113, s. 1995

DOJ OPINION NO. 113 , s. 1995 October 24, 1995 Undersecretary Ernesto M. Ordoez Department of Trade and Industry Bureau of Trade Regulation & Consumer Protection (BTRCP) 2/F Trade and Industry Bldg. 361 Sen. Gil J. Puyat Ave. Makati City Sir : This has reference to your request for legal opinion on whether or not foreign nationals may engage in the realty service practice. prcd It appears that the Cebu Regional Director or the Department of Trade and Industry (DTI) received queries as to whether or not a foreigner may be allowed to sell real estate properties in the Philippines and be accredited as realty service practitioner in any realty and brokerage company. The said Regional Director elevated the queries to the Director of the Bureau of Trade Regulation and Consumer Protection of the DTI and expressed the view that while the Foreign Investments Act of 1991 (R.A. No. 7042) does not include real estate brokers among the list of licensed professions reserved only for Filipinos, foreign nationals are still barred from the practice of realty service on the ground that under the Constitution, the right to practice a profession must be expressly conferred by law. The constitutional provision adverted to pertinently provides: "SEC. 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsman in all fields shall be promoted by the State. The state shall encourage appropriate technology and regulate its transfer for the national benefit." "The practice of all profession in the Philippines shall be limited to Filipino citizens , save in cases prescribed by law." (Art. XII, 1987 Constitution, Emphasis supplied) In connection with the aforequoted constitutional provision, the Foreign Investment Act of 1991 (R.A. 7042) provides: "SEC. 8. List of Investment Areas Reserved to Philippine Nationals (Foreign Investment Negative List). The Foreign Investment Negative List shall have three (3) component lists; A, B, and C: a) List A shall enumerate the areas of activities reserved to Philippine nationals by mandate of the Constitution and specific laws. . . ." Rule IX of the Implementing Rules and Regulations of R.A. No. 7042 in turn provides: " RULE IX. GUIDELINES FOR LIST A OF THE REGULAR FOREIGN INVESTMENT NEGATIVE LIST . SECTION 1. Coverage . List A of the FINL shall consist of the areas of activities reserved to Philippine nationals where foreign equity participation in any domestic or export enterprise engaged in any activity listed therein shall be limited to a maximum of forty percent (40%) as prescribed by the Constitution and other specific laws. The NEDA shall make an enumeration of said activities reserved to Philippine nationals by the Constitution and other specific laws. SECTION 2. Amendments . Amendments to List A may be made by the NEDA anytime to reflect changes made by law regarding the extent of foreign equity participation in any specific area of economic activity." List A of the ("Transitory Negative List pursuant to R.A. 7042") referred to in the said law and rules includes among the items where no foreign equity is allowed, the following: "2. Services involving the practice of licensed profession (see Annex for detailed listing) (Article XIV, Section 14 of Constitution)" The Annex to the Transitory Foreign Investment Negative List reads in part: "1. Licensed professions covered under List A.2 a. Engineering b. Medical and Allied Professions c. Accountancy d. Architecture e. Criminology f. Chemistry g. Customs Broker h. Forestry i. Geology j. Marine Deck Officer k. Marine Engine Officer l. Master Plumbing m. Sugar Technology n. Social Work o. Librarian p. Law" The listed licensed professions are those falling under the regulatory and licensing authority of the Professional Regulatory Commission n and with respect to the law profession, the Supreme Court. The real estate brokers and other realty service practitioners are not found in the list (List A) of licensed professions reserved for Filipinos only. The aforementioned practitioners are licensed by the DTI under Sec. 3 of Act No. 2728, as amended by R.A. No. 3969 which vests upon the DTI the following power and function among others: "(e) To organize, establish, create, maintain, and regulate, and whenever it may deem it proper, authorize the creation, under such regulations as it may prescribe, of commercial exchanges and other public places of exchange, and to suspend and abolish the same, as it may see fit; to qualify, approve, authorize, and license for periods not to exceed three years, as exchange agents, merchandise brokers, ship brokers and interpreters and real-estate brokers, and to suspend and revoke said licenses or any of them for cause; and to organize and authorize associations of exchange agents, merchandise brokers, ship brokers and interpreters and real estate brokers, subject to such regulations as it may prescribe, an to consolidate, suspend and dissolve the same." The Bureau of Trade Regulation and Consumer Protection of the DTI is in charge of monitoring the registration of business names and the licensing and accreditation of establishments and practitioners (Sec. 12, [a], Executive Order No. 133 [1987]), as amended by E.O. No. 242 [July 24, 1987]. To answer your query, it is thus necessary to determine whether realty service is a profession, the practice of which is reserved to Filipinos under the constitutional provision adverted to above. We agree that the language of the Constitution disqualifies aliens from practicing a profession and that an express provision of law allowing such practice by aliens is necessary to lift said disqualification. The laws providing for the regulation and licensing of the professions included in List A usually require Philippine citizenship for applicants to the board of qualifying examination but allow the practice of the profession concerned by aliens on the ground of reciprocity. The law (Act No. 3969) providing for the licensing of real estate brokers does not contain the same nationality requirement and foreign reciprocity provision. Nor does it embody detailed provisions on the regulation and licensing of real estate brokers. The said law is an old law, having been approved on December 2, 1932. However, the DTI pursuant to its rule-making powers has promulgated detailed rules and regulations governing the licensing and supervision of real estate salesman, brokers, appraisers and consultants and realty service practitioners. The said Rules prescribe the requirements for the grant of license, including the educational attainment of applicants, qualifying examinations, and experience. (Ministry [now Department] Order No. 39, s. 1985, as amended). Article I of the aforementioned Rules reads: "ARTICLE I STATEMENT OF POLICY 'SECTION 1. The primary purposes of the Administrative Order are (1) to protect the public from dishonest or incompetent salesmen, brokers, appraisers and consultants; (2) to prescribe standards and qualifications for these realty service practitioners; (3) to maintain high standards in the real estate profession ; and (4) to protect licensed real estate salesmen, brokers, appraisers and consultants from unfair or improper competition." (Emphasis supplied.) In the light of the foregoing provisions of the DTI rules and regulations, realty service can be considered a profession within the contemplation of Section 14, Article XII of the Constitution. The term "profession" has been defined as "a group of men pursuing a learned act as a common calling in the spirit of public service no less a public service because it may incidentally be a means of livelihood" (In the Matter of the Petition for Authority to Continue Use of Firm Name "Ozaeta, Romulo, etc.", 92 SCRA 1, 19 [July 30, 1979]). It has also been said that: "Formerly theology, law and medicine were specifically known as the professions; but, as the applications of science and learning are extended to other departments of affairs, other vocations also receive the name. The word implies professed attainments in special knowledge, as distinguished from mere skill; a practical dealing with affairs, as distinguished from mere study or investigation; and an application of such knowledge to uses for others as a vocation, as distinguished from its pursuit for one's own purposes." (Cummins v. Pennsylvania Fire Inc. Co., 134 NW 79, 82). Thus, in one case, our Supreme Court defined the term "profession" as a calling which requires specialized knowledge and often long and intensive preparation, including instruction in skills and methods (Capitol Bar and Night Club Association, Inc. vs. Secretary of Labor, 70 O.G. 8262, 8264). this broad definition is consistent with the intent and spirit of the provision of the Constitution as explained during the deliberation of the Constitutional Commission quoted hereunder: ". . . our purpose here is to lend more importance to the provision that the patrimony and the economy of the nation must be under the control of Filipinos. And in the exercise of rights, privileges or concessions under the provisions on the Article on National Economy and Patrimony, necessarily, the exercise of the profession is also involved. So we have to align the exercise of the profession with the exercise of rights and privileges." (Records of the Constitutional Commission of 1986, Vol. 3, p. 684). Accordingly, realty service which requires specialized knowledge and skills, certain units of college undergraduate study and/or the passing of qualifying written examinations and experience, is a profession, the practice of which is limited to Filipino citizens. Your query is, thus, answered in the negative. Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary n Note from the Publisher: Written as "Regulatory" in the original document.