Atty. Rodolfo M. Bausa

June 1, 1982 Atty. Rodolfo M. Bausa 16th Floor, Citibank Center Paseo De Roxas, Makati Metro Manila Sir : This has reference to your letter dated February 5, 1982, requesting the opinion of this Commission as to the interpretation of Section 23 of Batas Pambansa Blg. 68 in relation to Biophil, Inc., a domestic corporation registered with this Office and with the Board of Investments as a so called pioneer registered enterprise and therefore has been allowed ninety (90%) percent foreign equity. Section 23 of Batas Pambansa Blg. 68 provides in part as follows: ". . . a majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines." It appears from the foregoing provision that it is applicable to all domestic corporations. However, your attention is invited to the provisions of Presidential Decree No. 715 which amended Commonwealth Act No. 108, otherwise known as "The Anti-Dummy Law" which reads in pertinent parts: "...it is fair and equitable in line with the constitutional policy expressed in Article XIV, Section 5 of the Constitution, that foreign investors be allowed limited representation in the governing body of corporations or associations in proportion to their allowed participation in the equity of said entities." (2nd whereas clause) And following-up the above-premise, it is provided in the last paragraph of Section 1 of the same Presidential Decree as follows: "SECTION 2-A xxx xxx xxx provided, finally, That the election of aliens as members of the Board of Directors 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." In view of the above-mentioned provisions of Presidential Decree No. 715 and of the government's continuing policy of attracting foreign investment into the country, this Commission is of the opinion, and so holds, that while Section 23 of Batas Pambansa Blg. 68 requiring local residence for a majority of the members of the Board of Directors of a domestic corporation is a rule of general application, it should be properly interpreted as exempting from the coverage thereof domestic corporations with foreign equity participation in excess of thirty (30%) percent of the subscribed capital stock provided that it is approved by the Board of Investments, thus, allowing foreign equity to be duly represented in proportion to their equity participation in the enterprise. Please be guided accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner