Hon. Mohd A. Omar Fajardo

January 19, 1996 Hon. Mohd A. Omar Fajardo House of Representatives Quezon City, Metro Manila Sir : This refers to your letter dated January 17, 1996 requesting comments on the legality of the operation of foreign national who are engaged in the recruitment industry. LexLib Recruitment business is a nationalized business activity. Under Article 27 of 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". Being a nationalized activity, it is subject to the provision of COMMONWEALTH ACT NO . 108 , as amended by PD 715 , (An Act To Punish Acts Of Evasion of the Laws On The Nationalization Of Certain Rights, Franchises or Privileges), otherwise known as the ANTI-DUMMY LAW . Thus. corporations or partnerships engaged in such line of business are required by the Commission to comply with the requirements imposed under said Laws. While matters relating to the implementation of the provisions of the Labor Code are not within the primary jurisdiction of the SEC, it has the authority to look into any possible violation thereof, particularly on the matter of compliance with the required Filipino ownership. Under Section 17 (4) of the Corporation Code, non-compliance of the required percentage of ownership of capital stock to be owned by citizens of the Philippines is a ground for rejection or disapproval of Articles of Incorporation. In the case of the Anti-Dummy Law, Section 2-A thereof restricts election/appointment of foreigners to manage positions in business activities where there is a Constitutional or statutory provision imposing specific nationality requirement as a requisite for the exercise or enjoyment of a right, franchise or privilege. Thus, in an appropriate proceeding, the Commission in the exercise of its jurisdiction under P.D. 902-A, as amended, over intra-corporate affairs of corporations, including those involving management of the Board of Directors and corporate officers, particularly on their qualification, may administratively enforce compliance with the foreign nationality restrictions of the Anti-Dummy Law and impose administrative sanctions authorized by law, such as fines, removal from office or revocation of corporate/partnership franchise against any person or entity found to have violated said Law. We hope we can be of further assistance to you in the future. Very yours truly, (SGD.) PERFECTO R. YASAY Acting Chairman