Atty. Perseveranda A. Abrenica

September 11, 2002 SEC OPINION Atty. Perseveranda A. Abrenica Abrenica Duque Sicat Law Offices Suite 22, 2nd Floor, Colonnade Condominium Bldg. 132 Legaspi cor. Palanca Street, Legaspi Village Makati City Dear Atty. Abrenica, This is in reply to your letter dated August 20, 2002 regarding the election of foreign nationals in the board of trustees of Elysium Community Condominium Corporation and limited to the facts as stated therein. The Commission has had occasion to rule that the "anti-dummy law applies only to entities engaged in wholly or partly-nationalized economic activities, that is, where there is a Constitutional or legal provision requiring Philippine citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege. Accordingly, since there is no existing law limiting foreign membership in non-stock corporations and considering further that non-stock corporations do not normally engage in economic business activities, the same, as a general rule, cannot be read within the context of the provisions of said Law. However, where there is an existing law limiting foreign membership in a particular kind or type of non-stock corporation, the provisions thereof shall apply." ( SEC Opinion dated October 22, 1992, Mr. Nicolas Clamor ) Pursuant to the Philippine Constitution, Filipinos are given preference in the ownership of lands in the Philippines. Thus, under the 4th Foreign Investment Negative List, ownership of lands is limited to Filipino citizens or Filipino corporations, at least sixty (60%) percent of which is owned by Filipinos. Your corporation has for its primary purpose, "to own or hold title to the common areas in the condominium project known as "The Elysium".As such, it obviously involves the ownership of land and its improvements better identified as the "common areas" within the condominium project. It is therefore covered by the aforecited limitation. The anti-dummy law applies. The percentage of board seats allotted to non-Philippine nationals shall be proportionate to their actual equity/ownership participation or interest in the corporation. "The statutory ...ratio of the Filipino and foreign participation is computed, generally, on the basis of the number of members. In the instance where the articles of incorporation provide for different voting rights of several kinds of membership, the Commission opined that the computation of the ...ratio should be based on the number of members who are entitled to vote and be voted for as members of the board of directors/trustees." ( SEC Opinion dated November 9, 1995 ) SacTCA In the case of your corporation, the percentage of board seats allowable to foreign nationals depends on the percentage of foreign membership therein. Should the percentage of foreign membership with voting rights in your corporation be forty (40%) percent, then three (3) foreign nationals may be elected as directors in a board composed of seven (7) members. By mathematical computation, 40% of 7 is 2.8. "Under the rule on rounding off numbers, the decimal figures to the right of a specified number of places are dropped after increasing the final remaining figure by 1, if the first digit dropped is 5 or greater." ( SEC Opinion dated Nov. 7, 1989 ) Hence, three (3) directors constitute 40% of the total board membership of seven (7). Very truly yours, (SGD.) JESUS E.G. MARTINEZ Commissioner