Aiser K. Hussain, et al.

March 25, 1992 Aiser K. Hussain, et al. All Brothers International Placement Company Ltd. Suite 402 L & S Building 1414 Roxas Boulevard corner Sta. Monica Street, Ermita Manila S i r : This refers to your letter of March 23 & 24, 1991 requesting exemption from the SEC ruling that "recruitment" companies fall under the category of partly nationalized industries and as such, foreigners are not allowed to intervene in the management, operations, administration or control thereof. The Commission, on several occasions, has ruled that in films engaged in wholly or partially nationalized activities, aliens are banned from being appointed to management positions as president, vice-president, treasurer, auditor, etc. of said companies pursuant to the ruling of the Department of Justice Re: Opinion No. 37, 1976. However, they can be elected directors in proportion to their allowable participation or share in the capital of such activities in accordance with Commonwealth Act No. 108, as amended by P.D. 715, otherwise known as the Anti-Dummy Law. The Law provides, thus: "SECTION 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 or 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 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 entities ." (Emphasis supplied) Likewise, where the function of the Chairman of the board as provided for in the by-laws of the corporation consists merely of presiding at the meetings of the board or committees of which he is a member, a non-Philippine national may qualify as Chairman of the board. (SEC Opinion dated May 15, 1985 addressed to Atty. Francisco F. Angeles) Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman