Regarding basis of alien participation in the board which should be in

proportion to their allowable participation or share in the capital of

such entities.

Section 2-A of the Anti-Dummy Law provides against the employment by

any person, corporation or association of an alien, who shall intervene in the
management, operation, administration or control thereof, whether as
officer, employee, or laborer, applies where the exercise or enjoyment of the
property or of the franchise, privilege, or business engaged in by such
person, corporation or association "is expressly reserved by the
Constitution or the law to the citizens of the Philippines" or
"corporations or associations at least 60% of the capital of which is
owned by such citizens." Xxx It further provides 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 allowed in proportion to their allowable
participation or share in the capital of such entities.
The rule on membership in the board of directors by aliens is limited to their
proportionate share in the capital, i.e., capital which serves as reference
whether the corporation is wholly or partly nationalized.
Worth noting is the Opinion of the Secretary of Justice, No. 37, s. 1976
stating
Anti-Dummy Law was merely intended to give alien stockholders limited
representation in the governing board in proportion to their equity,
and therefore, alien directors may not hold any other position in said entity.
Had the decree been intended to except alien directors from the general
prohibition against the employment of aliens, and to allow their intervention
in the management of said entities as officers thereat, the proviso would
have been so worded to express that purpose.
Moreover, in the Foreign Investments Act of 1991 (FIA), Section 3(a) of the
FIA (as amended by Republic Act No. 8179) provides:

. . . the term Philippine national shall mean a citizen of the Philippines; or a

domestic partnership or association wholly owned by citizens of the Philippines; or a
corporation organized under the laws of the Philippines of which at least sixty
percent (60%) of the capital stock outstanding and entitled to vote is owned and
held by citizens of the Philippines; or a corporation organized abroad and registered
as doing business in the Philippines under the Corporation Code of which one
hundred percent (100%) of the capital stock outstanding and entitled to vote is
wholly owned by Filipinos or a trustee of funds for pension or other employee
retirement or separation benefits, where the trustee is a Philippine national and at
least sixty percent (60%) of the fund will accrue to the benefit of Philippine
nationals: Provided, That where a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC)
registered enterprise, at least sixty percent (60%) of the capital stock
outstanding and entitled to vote of each of both corporations must be
owned and held by citizens of the Philippines and at least sixty percent
(60%) of the members of the Board of Directors, in order that the
corporation shall be considered a Philippine national.
Hence, since the corporation applying must be partly nationalized i.e., it must only
have up to 40% foreign equity, then it must follow the rule on restricted ownership
of stocks and membership in the board as far as foreign equity and membership are
concerned.