SEC En Banc Case No. 06-14-335 DENTAL MANAGEMENT CENTER CORP. and FREDERIC G. PEIGNON Appellant, -versus- COMPANY REGISTRATION AND MONITORING DEPARTMENT, represented by Director Ferdinand Sales, Appellee.

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance

CORP.and FREDERIC G.PEIGNON DENTAL MANAGEMENT CENTER

Appellant,

-versus- NO. 06-14-335 SEC EN BANC CASE

represented by Director Ferdinand B. Sales, MONITORING DEPARTMENT, COMPANY REGISTRATION AND Appellee.

DECISION

Exchange Commission.3 (DMCC),' and Frederic G. Peignon from the letter-ruling of the Company Registration and Monitoring Department (CRMD)2 denying DMCC's request for the issuance of a Certificate of Good Standing from the Securities and This resolves the Appeal of Dental Management Center Corp.

DMCC was incorporated with the following purposes: doing business under the name and style of "METRO DENTAL CENTER." existing under Philippine Laws with principal office address at the 2nd Floor, ALGO Center, 162 L.P. Leviste St:, Salcedo Village, Makati City. DMCC is Appellant DMCC,4 is a domestic corporation duly organized and

Primary Purpose

enterprises which shall provide professional, dental and surgical establish laboratory for dental fabrications and in connection To establish, own, operate, maintain and manage dental centers and clinics and other related facilities and businesses including services and operations and prostethic dentistry, as well as to therewith to grant or sell franchise to other entities or persons pharmacies, scientific research centers and other allied

authorizing them to operate and provide similar dental and

2 Hereafter, "CRMD." 3 Hereafter, "SEC." 4 Hereafter, also referred to as "appellant DMCC." 1 Hereafter, "DMCC."

fAM t Center Corp. vs CRMD

SEC EN BANC CASE NO.06-14-335 Page 2 of 15

corporations, partnership, or other entities for the franchising, lettering or lending of business name or goodwill of business management and operation of franchises as described above, and/or act as agent or representatives of individuals, enterprises as enumerated above. performed by duly qualified and licensed dentists or surgeons organize, initiate, develop, promote, or otherwise undertake the and service mark of Dental Management Center Corp., provided who may be connected with the clinics, as well as to grant, surgical services under its trade name, trademark, service name, that purely professional, dental or surgical services shall be

Secondary Purposes

1. To purchase, acquire, own, lease, sell and convey real

deemed expedient, for any business or property acquired by the corporation. necessary or incidental to the conduct of the corporate business, and to pay in cash, shares of its capital stock, debentures and properties such as lands, building, factories, and warehouses and machineries, equipment and other personal properties as may be other evidences of indebtedness, or other securities as may be

X X X

as DMCC's President, Chief Executive Officer, and Chairman of the Board of Directors, as stated in DMCC's General Information Sheet for the year 2013 Appellant Frederic G. Peignon (Mr. Peignon),5 French citizen, served

Exchange Commission (SEC) for the issuance of a Certificate of Good Standing. Sometime in November, 2013, DMCC applied with the Securities and

the Anti-Dummy Law by having a foreign national as its President, in the person of Mr. Peignon. DMCC disagreed with CRMD's findings, explained the circumstances of DMCC, and argued that the corporation does not fall within the ambit of the Anti-Dummy Law. The CRMD initially opined that based on its findings, DMCC violated

5 Hereafter, "Frederic," or "Mr. Peignon," for brevity. 6 Hereafter, "SEc.

Dental Mana SEC EN BANC CASE NO. 06-14-335 ntGanter C Page 3 of 1s CRM

dated February 5, 20147 addressed to Atty. Mary Anne M. Lagura of the CRMD of the SEC. DMCC, through its counsel, formalized its objections through a letter

laws particularly the Negative Lists." medicine and allied professions but merely provides a venue for the provisions that owns the clinic or the venue while Filipino Dentists/Doctors are the ones who render professional services to the patients as what is sanctioned by our relation to the Philippine Foreign Investments Act -- Negative Lists which provided that "no foreign equity is allowed in the practice of profession more that it "is not engaged in the practice of profession moreso the practice of of "a healthcare company, particularly the management and maintenance of dental clinics and related facilities," in relation to the primary purpose in the Articles of Incorporation. While DMCC quoted the Anti-Dummy Law, in specifically the practice of medicine and allied professions," DMCC submits of these medical services." Further, it argued that "DMCC is a corporation In its February 5, 2014 letter, DMCC reiterated that its business is that

industry classification but its primary purpose under its Articles of Incorporation. DMCC further explained: "Hospital Activities and Medical Dental Practice," which makes it covered by the Negative Lists -- "practice of profession" exclusively reserved for Filipinos. To counter this, DMCC argued that what is controlling is not the According to the CRMD, DMCC's industrial classification falls under

rendering professional services and not merely providing the venue for the same. DMCC is just providing the venue, the clinic and the equipment, but not the professional services the exercise ...Moreover, the practice of profession involves the act of

that DMCC does not intervene in the delivery of the professional of which is admittedly restricted to Filipinos. It also bears to note

DMCC as the owner and operator of the clinics.8 services as the same is totally separate from the business of

In its conclusion, DMCC submitted that the Anti-Dummy Law does not

partly nationalized industry. Hence, it argued that the SEC should give a Certificate of Good Standing in favor of DMCC. apply to the corporation since it is "neither engaged in a nationalized nor in a

request, citing Republic Act No. 7042 also known as "The Foreign Investments Act of 1991," and the definition of a domestic market enterprise In its response dated February 10, 2014, the CRMD denied DMCC's

7 Annex "B" of appellants' Memorandum of Appeal. 8 See Annex "B" of appellants' Memorandum of Appeal.

ental Mar SEC EN BANC CASE Center Co NG p.vs CRMD 06-14-33

Page 4 of 15

as one which produces goods for sale, or renders services to the domestic market entirely?, or if exporting a portion of its output fails to consistently export at least 60% thereof.

with the paid-up requirement of US$200,000.00. Moreover, the CRMD further condition that domestic foreign-owned corporation should comply stated: is prohibited or limited by the Constitution and existing laws, subject to the up to 100% of domestic market enterprises unless foreign ownership therein The CRMD further explained that non-Philippine nationals may own

to Philippine-nationals. By "Philippine National", is meant a wholly-owned by citizens of the Philippines or domestic Conversely, domestic market enterprise with paid-up equity citizen of the Philippines or domestic partnership or association capital of less than the equivalent of US$200,000.00 is reserved

Philippines. Philippines of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the partnership or a corporation organized under the laws of the

in a corporation engaged in domestic market enterprise to only US$200,000.00. A corporation operating as a domestic market considered as engaged in a partly-nationalized activity. Corollary thereto, FINL-List B limits foreign equity participation 40% unless it complies with the paid-up requirement of enterprise with a paid-up capital of less than US$200,000.00 is

A review of its 2013 General Information Sheet will reveal that subject corporation is 99.9% Filipino-owned and has capital

activity. P3,125,000.00, which is less than the equivalent of US$200,000.00. Clearly, it is engaged in a partly-nationalized stock of P50,000,000.00 with total paid-up capital of

It bears emphasizing also that one of the secondary purposes of subject corporation is ownership of real properties, such as lands.

Under FINL, in consonance with Section 7, Article XII of the 1987 Constitution, acquisition and ownership of private lands is

participation is limited to only forty percent (40%). a partly-nationalized activity wherein foreign equity

Section 2-A of The Anti-Dummy Law provides:

9 See Annex "C" of appellants' Memorandum of Appeal, emphasis retained.

SEC EN BANC CASE NO rp.vs CRM Page 5 of 15 06-14-335

Section2-A. Unlawfuluse, Exploitation or enjoyment -- Any person, corporation, O1 association which, having in its name or under its control, a right, franchise, privilege, property or expressly reserved by the Constitution or the laws business, the exercise or enjoyment of which is

to citizens of the Philippines or of any other specific

allows any person, not possessing the qualifications said right, franchise, privilege, property or business qualified under the Constitution, or the provisions required by the Constitution, or existing laws to or enjoyment thereof by a person, corporation or association not possessing the requisites prescribed by a the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or conveys to a person, corporation or association not otherwise of the existing laws; or in any manner permits or sixty per centum of the capital of which is owned by such citizens, permits or allows the use, exploitation country, or to corporations or associations at least

acquire, use, exploit or enjoy a right, franchise.

Philippines or of any other specific country, to intervene inthe privilege, property or business, the exercise and Constitution or existing laws to citizens of the enjoyment of which are expressly reserved by the management, operation. administration or control thereof, whether as an officer, employee or laborer therein with or without remuneration except technical personnel whose

Secretary of Justice, and any person who knowingly aids, assists or abets in the planning consummation employment may be specifically authorized by the

or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for

the president, managers or persons in charge of person, corporation or association shall, in addition franchise or privilege enjoyed or acquired in than five thousand pesos: Provided, however, That liable in lieu thereof: Provided, further, That any not less than five nor more than fifteen years and by a fine of not less than the value of the right. violation of the provisions hereof but in no case less corporations, associations or partnerships violating the provisions of this section shall be criminally

to the penalty imposed herein, forfeit such right,

Dental M SEC EN BANCC V CRM

of1

allowed in proportion to their allowable participation or share in the capital of such entities.3 franchise, privilege, and the property or business this Act: And provided, finally, That the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be enjoyed or acquired in violation of the provisions of

positions in corporations engaged in partly-nationalized subject to the restrictions on foreigners of The Anti-Dummy Law, which prohibits foreigners from holding managerial activities. Based on the foregoing, we find the subject corporation is

treasurer, etc. activities, foreigners are banned from being appointed to management positions, such as president, vice-president, proportion to their allowable participation or share in the capital Filipinos, are prohibited from being elected in management states that, in firms engaged in wholly or partly-nationalized of the corporation engaged in activities that are reserved to positions, such as the president (SEC-OGC Opinion 12-01). This is consistent with DOJ Opinion No. 37, Series of 1976, which Foreigners, while allowed to sit as directors or trustees in

French national, albeit a shareholder and director of subject corporation, is not qualified to occupy the position of a president/chief executive officer of same corporation. Accordingly, we are of the view that Mr. Peignon, a

of CRMD's February 10, 2014 decision. In this letter, DMCC submitted the following issues for CRMD's reconsideration: DMCC filed a letter dated March 24, 2014, praying for reconsideration

(1 Whether DMCC is engaged in nationalized or partly. nationalized activity;

2 Whether the restrictions in Section 2-A of the Anti-

corporation and 99.9% Filipino-owned; Dummy Law are applicable to DMCC, a domestic

(3 Whether Mr. Frederic G. Peignon, a French National, who

holds in his name one nominee share in DMCC, may be

SEC EN BANC CASE NO.06-14-335 ementer Corp.vs CRM Page 7 of 15

elected as one of its directors and as its President and CEO: and

4 Whether the secondary purpose for which DMCC was

effectively makes it as a nationalized or a partly nationalized corporation. organized, i.e., ownership of real properties such as lands,

the corporation does not mean that the corporation is itself engaged in the this supports its position that "the fact that a corporation hires medical practice of medicine and/or other allied medical professions."1 dental centers, clinics, pharmacies, scientific research centers and other allied enterprises and is in no way engaged in the practice of the medical profession. DMCC cites Alfafara, et al., vs. Acebedo Optical Co., Inc.,1 and argues that practitioners to practice their profession in the course of their employment in engaged in nationalized or partly-nationalized activities, as indicated in its Articles of Incorporation. DMCC posits that it merely operates and manages On the first issue, DMCC argues that the subject corporation is not

is 40% or less, then, the minimum paid-up capital requirement of business to be either nationalized or partly-nationalized. Consequently, DMCC claims that when the foreign stockholdings in a domestic corporation US$200,000.00 does not apply. Since DMCC is 99.9% Filipino-owned, the US$200,000.00 paid-up capital requirement finds no application. engaged in the 9th FINL, it is crystal clear that it is not engaged in nationalized and/or partly nationalized activities. On the issue of paid-up capital of US$200,000.00, DMCC contends that the minimum paid-up capital not engaged in the practice of medical profession, and that its business is not requirement of US$200;000.00 applies only when the foreign equity in a domestic corporation exceeds 40%, and is not the basis for classifying the DMCC argues further that since the subject corporation, allegedly, is

deemed to have the effect of changing a 99.9% Filipino-owned corporation into a nationalized or partly-nationalized entity. Go Kim Pah Foundation, and that his single nominal share could not be DMCC also states that Mr. Peignon holds a nominal share in trust for

stating that the provisions of the Anti-Dummy Law, particularly, Section 2-A thereof, apply only to corporations engaged in nationalized or partly- nationalized activities. The Anti-Dummy Law should not be made to apply to corporations whose activities or businesses are not reserved, whether fully On the second issue, DMCC cites SEC Memorandum Circular No. 8

or partially, only to Filipinos such as this case. DMCC also cites the

11 See page 3 of DMCC's March 24, 2014 letter, Annex "D" of appellants' Memorandum of Appeal. T0 G.R. No. 148384, April 17, 2002

or partly-nationalized activity. appointment to a managerial position by itself does not constitute violation of the Anti-Dummy Law when the Corporation is not engaged in a nationalized may be revoked at any time by the trustor. nominal share is held in trust for and on behalf of a Filipino entity, which trust badges of "dummy status," and submits that none of the indicators apply to it. While Mr. Peignon is a foreign national as DMCC's President and CEO, his Department of Justice Opinion No. 165, Series of 1984, laying down the DMCC maintains that Dental Man EC EN BANC CASE NO. 06-14-33: t Center Corp.vs CRMD Page 8 of 15

Mr. Peignon's election as Director and to his appointment as President and CEO. nationalized or partly-nationalized industry, there is no legal impediment to On the third issue, DMCC contends that because it is not engaged in a

a nationalized or partly-nationalized corporation.12 corporations to own real properties in the Philippines does not make it either Philippines. Moreover, DMCC maintains that having the right of domestic properties in the Philippines, as this is explicitly provided for as one of the powers of the corporations under Section 36 of the Corporation Code of the in which DMCC is engaged.To support its argument, DMCC states that domestic corporations are expressly allowed to acquire, possess, and own real completely no connection between such purpose and the nature of the business of acquiring real properties as stated in the Articles of Incorporation, there is On the fourth issue, DMCC argues that despite its secondary purpose

counsel received CRMD's April 21, 2014 letter on May 16, 2014. DMCC that the position of the CRMD regarding the matter remains. DMCC's DMCC's March 24, 2014 letter request for reconsideration, and informing The CRMD responded13 through a letter dated April 21, 2014, denying

through registered mail. Hence, this Appeal. their appeal together with their Memorandum on Appeal on June 2, 2014 Since May 31, 2014 fell on a Saturday, DMCC had until the next working day, or June 2, 2014, to file its appeal. DMCC and Mr. Peignon timely filed DMCC had a period of 15 days, or until May 31, 2014 to file its appeal.

having been filed. to file a Reply Memorandum within 10 days from receipt, CRMD waived its right to file the same for lapse of the prescribed period without the Reply Despite this Commission's Order dated June 10, 2014 directing CRMD

12 See page 13 of Annex "D" of appellants' Memorandum of Appeal. 13 To DMCC's letter request for reconsideration dated March 24, 2014.

SEC EN BANC CASE NO 1A

Pag

Appeal, thus: This Commission shall now resolve the following issue central to this

NATIONALIZED ACTIVITY, THUS PROHIBITING THE CORPORATION WHETHER DMCC IS ENGAGED IN A NATIONALIZED OR PARTLY-

FROM APPOINTING OR ELECTING A FOREIGNER IN A MANAGEMENT POSITION.

hinge on this Commission's findings on the above issue. Logically, the resolution on whether CRMD's actions are correct shall

DISCUSSION

Chairman of the Board of Directors for the year 2013. Mr. Peignon was likewise a director of DMCC, holding one share in his name. In this case, appellant Mr.. Peignon was DMCC's President, CEO, and

In order to resolve whether Mr. Peignon is prohibited from holding this

No. 108,14 otherwise known as the " Anti-Dummy Law," which states: position, this Commission shall refer to Section 2-A of Commonwealth Act

Section 2-A. Unlawful use, Exploitation or enjoyment -- Any person, corporation, or association which, having in its name or

business, the exercise or enjoyment of which is expressly under its control, a right, franchise, privilege, property 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 Philippines or of any other specific country, or to corporations or reserved by the Constitution or the laws to citizens of the possessing the requisites prescribed by a the Constitution or the

to a person, corporation or association not otherwise qualified or conveys said right, franchise, privilege, property or business under the Constitution, or the provisions of the existing laws; or laws of the Philippines; or leases, or in any other way, transfers

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

of the Philippines or of any other specific country, to intervene expressly reserved by the Constitution or existing laws to citizens

Privileges 14 An Act to Punish Acts of Evasion of the Laws on the Nationalization of Certain Rights, Franchises or

Dental Management Center Corp.ys CRMT SEC EN BANC CASE NO. 06-14-335 Page 10 of 15

whether as an officer, employee or laborer therein with or in the management, operation, administration or control thereof. without remuneration except technical personnelwhose

the planning consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for employment may be specifically authorized by the Secretary of Justice, and any person who knowingly aids, assists or abets in

less than the value of the right, franchise or privilege enjoyed or acquired in violation of the provisions hereof but in no case less] not less than five nor more than fifteen years and by a fine of not

than five thousand pesos: Provided, however, That the president. managers or persons in charge of corporations, associations or

person, corporation or association shall, in addition to the penalty imposed herein, forfeit such right, franchise, privilege, and the partnerships violating the provisions of this section shall be criminally liable in lieu thereof: Provided, further, That any

property or business enjoyed or acquired in violation of the

of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable provisions of this Act: And provided, finally, That the election

participation or share in the capital of such entities.

officers in wholly or partially nationalized business activities, they are While foreigners are disqualified to be elected/appointed as corporate

management function. The powers delegated to the Board of entities in proportion to their shareholdings. The reason for the exception is that the Board of Directors/governing body performs specific duties as a "body." Unlike corporate officers, each members of the Board of Directors/governing body has no individual power or authority to perform allowed representation in the Board of Directors or governing body of said

Directors/governing body can only be exercised by it acting as a body when a quorum is present. Hence, there can be no intervention in the management. operation, administration and control of the corporation by the members thereof in their individual capacity. All told, Mr. Peignon's appointment as a member of the Board of Directors is not in issue as this is permitted by prevailing laws.

On the other hand, it is well-settled that Section 2-A of the Anti. Dummy Law prohibits aliens from being elected or appointed to management positions such as president, vice-president, treasurer, secretary, etc., in business activities where there is a constitutional or statutory provision

statutory provisions are reflected in the 9th Foreign Investment Negative enjoyment of a right, franchise, or privilege. The foregoing constitutional and imposing a specific nationality requirement as a requisite for the exercise or

Dental ECEN BANC CASE NC p.vs CRM 06-14

List,15 in accordance with Republic Act No. 7042, also known as the "Foreign Investments Act of 1991." The relevant provisions state:

9th Regular Foreign Investment Negative List A

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS

No Foreign Equity

X XX

2. Practice of all professions16 (Art. XII, Sec.14 of the Constitution, Sec. 1 of R.A. 5181)

X X X

b Medicine and allied professions

X X X

I. Dentistry (R.A. 9484)

X X X

Up to Forty Percent (40%) Foreign Equity

X X X

18. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4 of RA 9182)

be permitted to engage in dentistry, the corporation must not have any foreign falling under the classification of "No Foreign Equity" which means a equity. requirement of 100% Filipino ownership. Thus, even if a corporation would As stated, dentistry is exclusively reserved to Filipino Citizens, even

own private lands. Meanwhile, domestic corporations with up to 40% foreign equity may

15 Executive Order No. 98, Promulgating the Ninth Regular Foreign Investment Negative List 16 This is limited to Filipino citizens save in cases prescribed by law.

Dental Man Cantart VS CRMI

SEC EN BANC CASE NO. Page 124of 15

hires medical practitioners to practice their profession in the course of their employment in the corporation does not mean that the corporation is itself engaged in the practice of medicine and/or other allied medical profession." centers and other allied enterprises, without allegedly being engaged in practice of dental services. Co., Inc.,17 and draws the following conclusion: "the fact that a corporation nationalized or partly-nationalized industry. DMCC relies on the wording of its "primary purpose" in its Articles of Incorporation, arguing that it merely operates and manages dental centers, clinics, pharmacies, scientific research] Moreover, DMCC cites the case of Alfafara, et al., vs. Acebedo Optical, Appellant DMCC strongly contends that it is not engaged in a

persuaded. After a thorough review ofDMCC's Articles of Incorporation and does all of the following: its submissions, this Commission finds that DMCC is thus engaged in the practice of medicine and other allied professions, specifically in providing dental services. This Commission finds improbable DMCC's thesis that it Despite DMCC's arguments and suppositions, this Commission is not

( b (( ( () has in its employ dentists to perform contracted services; reports its income under all its branches as "dental establishes the dental centers and clinics, dental, and surgical services and operations and prostethic dentistry; owns the dental centers and clinics; manages the dental centers and clinics and other related facilities and businesses which shall provide professional, operates the dental centers and clinics;

services": () does business under the name of "Metro Dental Center."

it were true that DMCC merely provided the venue then it should have reported its income as rental services. Moreover, since they report the "denital services" as its income, necessarily. this means that DMCC provided the said services, through the dentists under their employ within the clinics that they established, owned, and operated. If and yet claim that it is not at all engaged in the dental profession.

picked phrases to support DMCC's contention, would reveal that DMCC thus] engaged in providing dental and surgical services. To be accurate, we quote the primary purpose: Moreover, a reading of the entire primary purpose, and not just cherry-

17 Hereafter, "Acebedo Optical case"

Dental Management Center Corp. vs CRMD SEC EN BANC CASE NO.06-14-33 Pa ge 13 of 15

Primary Purpose

individuals, corporations, partnership, or other entities for the franchising, lettering or lending of business name or goodwill of business enterprises as provided that purely professional, dental or surgical services shall be performed by duly qualified and licensed dentists or surgeons who may be promote, or otherwise undertake the management and operation of franchises as described above, and/or act as agent or representatives of enumerated above. service name, and service mark of Dental Management Center Corp. connected with the clinics, as well as to grant, organize, initiate, develop. scientific research centers and other allied enterprises which shall prostethic dentistry, as well as to establish laboratory for dental fabrications and in connection therewith to grant or sell franchise to other entities or persons authorizing them to operate and provide similar dental and surgical services under its trade name, trademark, clinics and other related facilities and businesses including pharmacies, provide professional, dental and surgical services and operations and To establish, own, operate, maintain and manage dental centers and

to grant or sell franchise to other entities or persons, DMCC itself acknowledges that it provides dental and surgical services, not merely a venue provide similar dental and surgical services" in relation to DMCC's intent Notice that in the underlined portion which states: "to operate and

for the same. While DMCC in its submissions placed emphasis only on the first part, this Commission cannot accept its arguments hook, line, and sinker.

As to the doctrine in the Acebedo Optical case, the facts do not fall

Optical Co., Inc. from practicing optometry in the province of Cebu, for squarely with this case, as the petitioners therein sought to enjoin Acebedo

violation of the Optometry Law and the Code of Ethics. However, the Court

and supplies. Clearly, the distinction is too important to brush aside. found that Acebedo Optical Co., Inc., is merely engaged in the business of selling optical products, hence, a merchandising business, and not an optometry clinic. In this case however, DMCC provides dental services performed by dentists under its employ, not simply selling dental instruments

Section 14, Article XII of the 1987 Constitution declares that the practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law. The provision clearly sets the standard with regard to the practice of profession, as well as the exception thereto. As a general rule, the practice of all professions in the country is exclusively reserved to Filipino Citizens, except when there is a law which provides otherwise. This basic constitutional rule is aimed at protecting the

Dental Mar SEC EN BANC CASE NO. Page 14 of 15 vs CRM

that engaged in the practice of dentistry is prohibited, since there is no law that allows otherwise. welfare of Filipino professionals1* and has been the long standing-rule upon] profession is based. Based on this principle, foreign equity in corporations which the enactment of laws and regulations relating to the practice of

Certificate of Good Standing. nationalized industry and the CRMD was correct in not issuing to it a Hence, on this issue alone, DMCC was indeed engaged in a

Incorporation, the first of which states: placed on DMCC's Secondary Purposes as stated in its Articles of In addition to the Commission's findings, emphasis should also be

Secondary Purposes

1 To purchase, acquire, own, lease, sell and convey real properties

acquired by the corporation. such as lands, building, factories, and warehouses and machineries, to the conduct of the corporate business, and to pay in cash, shares of its capital stock, debentures and other evidences of indebtedness, or other securities as may be deemed expedient, for any business or property equipment and other personal properties as may be necessary or incidental

corporate business, which in this case, includes a primary purpose of establishing, owning, and operating dental centers and clinics and other related facilities and businesses. powers of a corporation under Section 36 of the Corporation Code, thus: acquire real properties as may be necessary or incidental to the conduct of its This secondary purpose clearly states DMCC's intent to purchase or DMCC contends that this is one of the

Sec. 36. Corporate powers and capacity. - Every corporation incorporated under this Code has the power and capacity:

X X X

T To purchase, receive, take or grant, hold, convey, sell, lease, pledge. mortgage and otherwise deal with such real and personal property. including securities and bonds of other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution;

XXX

18 Bernas, The 1987 Constitution of the Republic of the Philippines (1996), p. 1049.

Dental Mana SEC EN BANC CASE NO.06-14-335 ent Center Corp.vs CRM Page 15 of 15

properties"" in relation to its primary purpose. No other conclusion can be had purpose of also acquiring real property. is subordinate to the Constitution. DMCC's argument is also misplaced because the issue raised by the CRMD was that DMCC's secondary purpose included its intent "to purchase, acquire, own, lease, sell and convey real except that DMCC did not limit itself to leasing real property, but had the Corporation Code, this power is likewise limited by other relevant laws and While the above provision is one of the powers granted by the

corporations (up to 40% Foreign Equity), DMCC could not have a foreigner President, Chief Executive Officer, and Chairman of the Board of Directors in clear violation of the Anti-Dummy Law. occupying a management position, let alone, have Mr. Peignon as its Since ownership of real properties are reserved to Filipinos and Filipino

denied. WHEREFORE, premises considered, the instant appeal is hereby

Division and the Company Registration and Monitoring Department for proper notation. Let a copy of this Order be furnished the Corporate Filing and Records

SO ORDERED

Pasay City, Philippines; 30 July 2019.

EMI . AQUINO

CHairperson V

ANTONIETA F. IBE Inata autuag.lle Commissioner EPHYRO LUIS B. AMATONG Commissioner Wx

JAVEY PAUL D. FRANCISCO Commissioner KELVINLESTER K.LEE Commissioner