New Fems Garments Industries Co., Inc.

June 8, 1992 New Fems Garments Industries Co.,Inc. c/o Mr. Devidass P. Sahajwani 3rd Floor, Fems Tower One, 1289 Sobel Roxas Avenue, corner South Superhighway Manila Gentlemen: This refers to your letter of May 27, 1992 requesting opinion on the query posed therein. As stated, the key or executive officers under your by-laws are the President, Secretary and Treasurer only. The By-laws further provides that subject to confirmation by the board, the president may create additional positions and appoint additional personnel as the need arises. Your queries are: a) what positions can be created pursuant to said by-law provision and whether foreign nationals can be elected to such positions e. g. whether you can employ or elect a foreign national (Indian) specifically to be Asst. Gen. Manager or Vice President. The "executive officers" of a corporation are the president, vice-president, secretary, and treasurer, and such term generally implies some sort of managerial responsibility for the affairs of the corporation and imparts a close connection with the board of directors. (2 Fletcher, Cyc.,sec. 269.1) The term "manager" indicates that such person is endowed with the general management or supervision in whole or a particular part of a business. Thus, if the "Asst. Manager" or Vice President are authorized to perform the powers or duties of the manager or president in their absence, their acts, when performed in line with their duties, are within the scope of "management",and therefore, they come within the context of the term "executive officers",and considering that your by-laws expressly allows creation of additional positions, it may, pursuant thereto, create such positions. 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 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 articles of incorporation of your corporation attached in your letter-query provides the following primary and secondary purpose clause: "To engage in and conduct the business of manufacturing, buying and selling, importing and exporting or otherwise deal in garments of any kind and description; and to conduct such other activities which may be necessary, incidental or conducive for the furtherance thereof." "To carry on a general mercantile and commercial business of importing, exporting, buying, selling, acquiring, holding or otherwise disposing of, or dealing in, any goods, wares, merchandise and commodities of all kinds and products, natural or artificial, of the Philippines and other countries, which are or may become lawful objects of commerce, and to have any and all powers set forth as fully as any juridical person, whether principal, agent, factor, broker, or otherwise; llcd xxx xxx xxx" From the aforecited purpose clause, it can be construed that subject corporation may engage in retail business .Thus, if the corporation is presently engaged in said line of business, it is prohibited from accepting foreign investors pursuant to R.A. 1180 , as amended, otherwise known as the Retail Trade Nationalization Law , and in view of the above-mentioned ruling of the Department of Justice and the provision of the Anti-Dummy Law, aliens are banned from being elected to management positions. However, should the corporation opt to accept foreign investors and desire to elect aliens to management positions, it may amend its articles of incorporation in accordance with Section 16 of the Corporation Code by expressly stating in the purpose clause that its trading business shall be limited to " wholesale " basis only, in which event, foreign ownership and participation in the management thereof may be allowed. Please be advised accordingly. llcd Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman