Atty. Francisco S. de Guzman

April 19, 1995 Atty. Francisco S. de Guzman Philippine Association of Service Exporters, Inc. Palacio Grande, Gen. Luna cor. Anda Sts. Intramuros, Manila S i r : This refers to your letter of April 8, 1995 questioning the SEC Letter dated March 8, 1995 addressed to POEA Administrator Felicisimo O. Joson which states that "in determining whether a foundation can engage in recruitment activities, reference must be made to the purpose clause provision in its articles of incorporation, and unless the power to carry out such activity is expressly conferred in the article of incorporation or by existing law or is incidental, necessary or essential to carry out the express objectives as appearing in its articles of incorporation, it cannot participate in the overseas recruitment program of the POEA." llcd It is your contention that even if the power to carry out the recruitment activity is expressly conferred in the articles of incorporation of a foundation or is incidental, necessary or essential to carry out the express objectives as appearing in its articles of incorporation, a foundation is prohibited by law and disqualified from participating in the recruitment and placement of workers and from being issued a license to operate as overseas recruitment agency in view of the use of the phrase "authorized capital stock" in the following provisions of the Labor Code: "ARTICLE 16. Private Recruitment . Except as provided in Chapter II of this Title, no person or entity, other than the public employment offices, shall engage in the recruitment and placement of workers." "ARTICLE 27. Citizenship Requirement . Only Filipino citizens of corporations, partnerships or entities at least seventy-five percent (75%) of the authorized 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." We disagree with your interpretation that the above cited provision of the Labor Code excludes "non-stock non-profit foundations". The principle stating that the express mention of one thing in a law excludes others not expressly mentioned does not apply in the present case. The above provision does not enumerate who are qualified but merely fixes the required Filipino ownership and limitation on foreign equity participation in stock corporations. In construing a statute the literal meaning of the language of the statute need not be adhered to. The spirit and intendment thereof must prevail over its letter, especially where adherence to the latter would result in absurdity. Thus, cases which do not come within the strict letter of the statute, if within the spirit, will fall within its scope; and cases within the letter of the statute, if without its spirit, will not come within its operation. (Statutes, Alcantara, Sec. 3 citing several authorities) We find it absurd why a law should prohibit the formation of non-stock, non-profit foundations organized mainly for purposes of aiding and assisting jobless or less privileged people to seek employment. In this particular undertaking, they should be given priority over stock corporations for obvious reasons. Foundations are organized normally for charitable and benevolent purpose not for private gain or profit . If hospitals, educational institutions or recreational institutions can be organized either as stock or non-stock corporation, why can recruitment and placement institutions not be organized in the form of non-stock corporations. We believe that for as long as the foundation organized to undertake recruitment and placement services has complied with the required 75% Filipino ownership/membership and provided further that any income that may be derived as incident to its operation shall not be distributed to the Directors/Officers or members of the foundation but shall be used for the furtherance of corporate purposes, it may be a grantee of a license. It has to be emphasized, however, that while upon registration with the Commission, a corporation acquires the rights, powers and attributes expressly authorized by law or incident to its existence, such registration does not automatically entitle a corporation the privilege to engage in the business or activity for which it was organized if under the law the operation thereof still requires a separate permit or license from other government agencies. The registration of a corporation with the Commission only constitutes a grant by the government of a legal personality of the entity to act as a corporation but does not preclude other government agencies, from exercising its police power over such corporation whenever public interest demands it. The issuance of a separate permit or license necessary for a corporation to engage in a particular business or undertaking is not always within the authority of the Commission but of other government agencies, which in the present case is the Philippine Overseas Employment Administration (POEA). In the issuance of license, the proper government agency is empowered to enforce the law, rules and regulations applicable on the business to be undertaken. Hence, it is within the jurisdiction of the POEA, not the SEC, to determine whether or not a non-stock, non-profit recruitment foundation may be issued license to undertake placement services. llcd Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman