Mr. Jose M. Sarmiento

April 12, 1991 Mr. Jose M. Sarmiento Administrator Philippine Overseas Employment Administration POEA Bldg.,Ortigas Avenue EDSA, Mandaluyong, Metro Manila S i r : This refers to your letter of March 6, 1991 relative to the SEC Opinion on the status of foreigners occupying management and administrative positions in partly nationalized industries which partly reads, as follows: cdll "Relative to the second issue, please be informed that recruitment companies fall under the category of partly nationalized industries, since at least 75% of the capital stock are required to be owned by Filipino citizens. This being the case, foreigners are not allowed to hold management or administrative positions, but may sit in the Board of Directors in representation of the extent of their holdings in the company." You stated that the implications of the above-quoted opinion on the operation of licensed recruitment companies over which the POEA exercises supervision and regulation pose a problem with respect to the status and extent of participation of foreign nationals in said companies. The POEA, thru its Licensing and Regulation Office, had previously indorsed to the NCR Regional Director of the Department of Labor and Employment all requests for issuance of alien working permit in behalf of foreign nationals employed by the company, which document is required before any acknowledgment of the foreign national's appointment is made by the POEA. Records of the POEA show that to date, there are 78 foreign nationals with valid working permits presently occupying administrative and managerial positions. Hence, to enable the POEA to adopt measures responsive to and consistent with the SEC opinion, you are requesting for consultation on the matter. The Commission, on several occasions, has ruled that in firms, 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, although 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 PD 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 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 entities." (Emphasis supplied) Under the Labor Code, "only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas". Accordingly, a recruitment or placement business is considered a partially nationalized business activity and, therefore, subject to the foregoing Law. However, it has to be emphasized that the above ruling is only the general rule as the law itself provides for an exception in cases of " technical personnel whose employment may be specifically authorized by the Secretary of Justice ".(See underscored phrase in the aforecited provision) Therefore, your Office may favorably recommend to the Department of Justice the employment or appointment of foreign nationals to management positions in recruitment companies if so necessary. cdlex Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman