DOJ OPINION NO.

 054, s. 1984
06 March 1984
 
The Governor
Central Bank of the
Philippines
Manila

Sir :
This has reference to your request for opinion on "whether the
assignment of a foreign bank representative as adviser of" the Equitable
Banking Corporation ("EBC") constitutes a violation of the Anti-Dummy
Law (C.A. No. 108, as amended).
It appears that EBC has negotiated with Sumitomo Bank, Ltd. of
Japan, for the assignment of one of the latter's senior representatives to
serve as adviser to EBC; that as such adviser "his main functions include
giving service and consultation as well as assistance to management
principally in areas such as: 1) promotion of the Bank's on-going
international banking business; 2) enhancement of the Bank's participation in
local; joint ventures involving Japanese and Philippine interests; 3)
extending the Bank's international correspondent banking network"; that
Sumitomo Bank will shoulder the "remuneration, living, and traveling
expenses" of the said adviser; that the Director of the Supervision and
Examination Sector of the Central Bank has opined that the arrangement
aforementioned would violate the Anti-Dummy Law; and that the EBC
President clarified that the adviser's functions are "merely informative in
nature" and "does not have any decision-making authority, neither does he
have any authority to commit the Bank to any liability or course of action".

Section 2-A of the subject statute reads:

"Any person, corporation, or association which, having in its name

or under its control, a right, franchise, privilege, property or
business, the exercise or enjoyment of which is expressly
reserved by the Constitution or the laws to citizens of the
Philippines or of any other specific country, or to corporations or
associations at least sixty per centum of the capital of which is
owned by such citizens, permits or allows the use, exploitation or
enjoyment thereof by a person, corporation or association not
 possessing the requisites prescribed by the Constitution or the
laws of the Philippines; or leases, or in any other way, transfers or
conveys said right, franchise, privilege, property or business to a
person, corporation or association not otherwise qualified under
the Constitution, or the provisions of the existing laws; or in any
manner permits or allows any person, not possessing the
qualifications required by the Constitution, or existing laws to
acquire, use, exploit or enjoy a right, franchise, privilege, property
or business, the exercise and enjoyment of which are expressly
reserved by the Constitution or existing laws to citizens of the
Philippines or of any other specific country, to intervene in the
management, operation, administration or control thereof, whether
as an officer, employee or laborer therein with or without
remuneration except technical personnel whose employment may
be specifically authorized by the Secretary of Justice, and any
person who knowingly aids, assists, or abets in the planning,
consummation or perpetration of any of the acts herein above
enumerated shall be punished by imprisonment for not less than
five or more than fifteen years and by a fine of but less than the
value of the right, franchise or privilege enjoyed or acquired in
violation of the provisions hereof but in no case less than five
thousand pesos; Provided, however, That the president, managers
or persons in charge of corporations, associations or partnerships
violating the provisions of this section shall be criminally liable in
lieu thereof: Provided, further, That any person, corporation or
association shall, in addition to the penalty imposed herein, forfeit
such right, franchise, privilege, and the property or business
enjoyed or acquired in violation of the provisions of this Act: and
Provided, finally, That the election of aliens as members of the
board of directors or governing body or 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," (Emphasis ours)

The meaning and scope of the foregoing provision of law, particularly

the underscored clause has already been the subject of judicial and
executive interpretations. Thus, in King vs. Hernaez (4 SCRA 792), the
Supreme Court said that —

"When the law says that you cannot employ an alien in any position
pertaining to management, operation, administration and control,
'whether an officer, employee, or laborer therein', it only means one
thing: The employment of a person who is not a Filipino citizen even
in a minor or clerical or non-control position is prohibited. The reason
 is obvious: to plug any loophole or close any avenue that an
unscrupulous alien may resort to flout the law or defeat its purpose,
for no one can deny that while one may be employed in a non-control
position who apparently is harmless he may later turn out to be a
mere tool to further the evil designs of the employer. It is imperative
that the law be interpreted in a manner that would stave off any
attempt at the circumvention of this legislative purpose."

The legislative rationale behind the said clause was reiterated in Luzon
Stevedoring Corporation vs. Anti-Dummy Board (46 SCRA 474), where it
was said that its policy and purposes is "to plug all loopholes that may be
utilized by designing foreigners to circumvent the nationalization laws of the
country".

To the same effect is Opinion No. 37, series 1976 of this Ministry,
wherein it was said that —

"A reading of Section 2-A readily reveals the legislative intent to

complement our nationalization laws by closing any avenue whereby
aliens may defeat their purpose [King vs. Hernaez, 4 SCRA 792,
(1962)]. It penalizes the employment of aliens in any positions
pertaining to management, operation, administration and control,
"whether as an officer, employee, or laborer therein", which means
that the employment of a person who is not a Filipino citizen even in a
minor or clerical or non-control positions is prohibited." (See also
Opn., dated September 24, 1975)

The clear and purposeful manner in which the clause in question has
been construed leaves no doubt the legal consequence of employing an
alien to serve as adviser of EBC, which is engaged in a partially nationalized
industry. For even assuming gratis argumenti that his functions are purely
"informative in nature", the information he gives would serve as basis for the
policies and decisions of the bank management in administering and
operating the institution and therefore constitutes, albeit indirectly,
interference "in [its] management, operation, administration or control".
Indeed, it would not be quite logical to say that the Anti-Dummy Law would
prohibit the employment of an alien as a mere clerk in a nationalized
business, and yet would allow the employment of another alien as adviser in
the same business. Indeed, the influence that an adviser exercises is
infinitely greater than that of a mere clerk.
 In the light of the foregoing, it is opinion that EBC may not employ an
alien adviser without violating the Anti-Dummy Law, except possibly as
technical personnel with the specific authority of this office pursuant to the
quoted legal provision, in which case, we would have to rely, pursuant to
established precedents, upon the comment and recommendation of your
office as to the technical nature of the employment.
 

Very truly yours,

(Sgd.) JESUS N. BORROMEO

Deputy Minister of Justice