DOJ Opinion No. 171, s. 1990

DOJ OPINION NO. 171 , s. 1990 September 25, 1990 Undersecretary Tomas Alcantara Board of Investments 385 Gil J. Puyat Avenue Makati, Metro Manila Sir : This refers to your request for opinion on the effect of Republic Act No. 6810, otherwise known as "Kalakalan 20", upon the provisions of Executive Order No. 226, also known as the Omnibus Investments Code of 1987. You state that Article 48 of E.O. No. 226 requires foreigners and domestic entities with more than 40% foreign equity to secure authority from the Board of Investments ("BOI") prior to engaging in any business activity; that on the other hand, R.A. No. 6810 allows any person or entity, without regard to nationality, which complies with the requirements prescribed in Section 2 thereof to engage in any business venture after having registered in the city or municipality where its principal office is located; that R.A. No. 6810 and its implementing guidelines are silent as regards BOI registration of persons or entities engaging in business pursuant to said statute; that the objective of E.O. No. 226 is to restrict the entry of foreign investments in areas which are adequately exploited by Filipinos or will not contribute to the sound and balanced development of the economy on a self-sustaining basis; and that to allow foreigners unlimited entry in small countryside business would defeat the said objective. prcd You further state the BOI's view that the abovecited provision of E.O. No. 226 applies in cases of foreign investors wishing to engage in countryside business activities pursuant to R.A. No. 6810 and therefore BOI authorization is still required of such foreign investors; otherwise, it would mean that R.A. No. 6810 has effectively amended E.O. No. 226, but which amendment has not been expressly provided in the former. Thus, the BOI has taken the position "that foreigners and entities with more than 40% foreign equity must first secure BOI authority before they can register under R.A. No. 6810." LexLib We find the abovestated position well-taken Article 48 of E.O. No. 226 provides: " No alien, and no firm, association, partnership, corporation or any other form of business organization formed, organized, chartered or existing under the laws other than those of the Philippines, or which is not a Philippine national, or more than forty percent (40%) of the outstanding capital of which is owned or controlled by aliens shall do business or engage in any economic activity in the Philippines or be registered, licensed, or permitted by the Securities and Exchange Commission or by any other bureau, office, agency, political subdivision or instrumentality of the government, to do business, or engage in any economic activity in the Philippines without first securing a written certificate from the Board of Investments to the effect: (1) That the operation or activity of such alien, firm, association, partnership, corporation or other form of business organization is not inconsistent with the Investment Priorities Plan; (2) That such business or economic activity will contribute to the sound and balanced development of the national economy on a self-sustaining basis; (3) That such business or economic activity by the applicant would not conflict with the Constitution or laws of the Philippines; (4) That the field of business or economic activity is not one that is being adequately exploited by Philippine nationals; and (5) That the entry of applicant therein will not pose a clear and present danger of promoting monopolies or combinations in restraint of trade." (Emphasis supplied) Upon the other hand, Section 2 of R.A. No. 6810, insofar as pertinent, reads: xxx xxx xxx As used in this Act, the term countryside and barangay business enterprises, hereinafter referred to as the CBBE ( Kalakalan 20 ), shall mean any business entity, association or cooperative registered under the provisions of this Act whose: (a) Number of employees does not exceed twenty (20) at any time for the purpose of undertaking a productive business enterprise recommended by the Department of Trade and Industry (DTI) provincial office that will help develop the economy in its area: (b) Assets, at the time of registration as CBBE, do not exceed Five hundred thousand pesos (P500,000.00) before financing; and (c) Principal office and location of business operations are located in the countryside as defined in the implementing rules and regulations issued by the Secretary of Trade and Industry." "SEC. 3. Countryside business entities shall, upon registration, pay two hundred and fifty pesos (P250.00) to the municipality or city where its principal place of office and business operations is located to cover the cost of the issuance of the license to operate, known as the CBBE authority." prcd xxx xxx xxx The apparent conflict between the aforesaid laws lies in the provision in E.O. No. 226 which requires foreigners or entities with foreign equity exceeding 40% of their total capitalization to secure a certificate from the BOI prior to engaging in business in the Philippines, while R.A. No. 6810 allows any person or entity to engage in countryside business activities provided there is compliance with the requisites prescribed therein, which do not include a nationality qualification for such person or entity. But since there is no provision in the latter amending or repealing the former, any such amendment or repeal, if at all, is merely implicit in character. Well-settled in statutory construction, however, is the rule that an amendment or repeal by implication is not favored (Phil-American Management Co. vs. Phil-American Management Employees Assn., 49 SCRA 194). In order to effect such amendment or repeal, the latter statute must be irremediably inconsistent with the prior law so that they cannot be made to reconcile and stand together. The language used in both statutes must show a repugnancy clear and convincing and anything short of that standard will not suffice to effect such amendment or repeal (Iloilo Palay and Corn Planters Assn. vs. Feliciano, 13 SCRA 377; Villegas vs. Subido, 41 SCRA 190; Jalandoni v. Endaya, 55 SCRA 261). A corollary principle, equally well-recognized, states that the enactment of a general law which is broad enough in its scope and application to cover the field of operation of an existing special law will not generally repeal the latter unless the legislative intent for such repeal is clearly manifest. Instead, the provisions of one must be reconciled with the other in order to carry both statutes into effect, so that the special law shall be deemed a qualification of, or an exception to, the provisions of the general act (Secretary of Justice Opns. No. 171, s. 1979; and Nos. 37 and 157, s. 1981; see also Opn. No. 127, s. 1987). It is easy to see that the provisions of E.O. no. 226 and R.A. No. 6810 under consideration are reconcilable. While R.A. No. 6810 may be deemed the general statute in allowing any person or entity, without regard to its nationality, to engage in countryside business enterprises as long as the requisites prescribed in Section 2 thereof have been complied with, the relevant provisions of E.O. No. 226 may be considered special statutory provisions which require any alien or entity with more than 40% alien equity, wishing to engage in any business activity in the Philippines to secure prior certification from the BOI. Both provisions of law can be harmonized and read together in that any individual or firm may engage in countryside business activities pursuant to R.A. No. 6810, provided he/it complies with the requirements prescribed in Section 2 thereof and registers himself/itself with the city or municipality where his/its principal office and business operations are located. However, if such individual is an alien, or such firm has more than 40% alien participation, he/it is required, in addition, to secure the BOI certification required in E.O. No. 226. Expressed differently, the operation of R.A. No. 6810 should be qualified by the applicable provisions of E.O. No. 226 insofar as those wishing to engage in countryside business enterprises are aliens or entities with more than 40% alien equity. prcd Please be advised accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary