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LUZON STEVEDORING vs Anti Dummy
Board
G.R. No. L-26094 August 18, 1972
Anti-Dummy Law applies to partially nationalized corps
FACTS
Luzon Stevedoring employs non american aliens,
Anti Dummy Board claims that this violates Anti
Dummy Law, Luzon files a motion for declaratory
relief.
plaintiff-appellant Luzon Stevedoring Corporation filed
a complaint for declaratory relief alleging that it has nine
(9) non-American aliens under its employ since long
before the decision entitled "Macario King vs. Pedro S.
Hernaez", which ruled that aliens other than Americans
may not be employed in whatever capacity in any retail
business in the Philippine because of Section 1 of
Republic Act No. 1180 (Retail Trade Law), in conjunction
with Section 2-A of Commonwealth Act No. 108, as
amended by Republic Act No. 134; and that defendant-
appellee Anti-Dummy Board in a letter advised plaintiff-
appellant that the Secretary of Justice rendered an
opinion to the effect that the employment of non-
American aliens in public utility corporations is
prohibited by Section 2-A of the Anti-Dummy Law; and
prays for a judicial construction of the provisions of
Section 16(a) of the Public Service Act in relation to
Section 2-A of the Anti-Dummy Law, as amended with
particular reference to the right of public utility
corporations to keep non-American aliens in their
employ
Luzon Argues that Sec 2-A of Commonwealth Act No.
108 as amended by RA No. 134 comprehends only
wholly nationalized businesses and not those partly
nationalized.
Plaintiff-appellant in launching its main argument that
the third predicate in Section 2-A of Commonwealth Act
No. 108 as amended by Republic Act No. 134
comprehends only wholly nationalized businesses and
excludes those partly nationalized.
Plaintiff-appellant further contends that because, unlike
in the first two dependent clauses, of the absence of the
phrase "or to qualified corporations or associations"
immediately after the phrase "citizens of the Philippines
or of any other specific country" in Clause 3 of Section 2-
A of the Anti-Dummy Law, Congress by such omission
intended to limit the prohibition against the
employment of non-American aliens in the operation of
public utilities to such public utilities as are owned
wholly by citizens of the Philippines or of any other
specific country.
Issue: WON the prohibition against the employment of
non-American aliens in public utility corporations refers
only to business, right, franchise or privilege which is
completely nationalized. (NO)
CHAN GOMASAN OF SITO BERDE
Held:
Luzon Admits that it is a Public Utility Corporation
Under the stipulation of facts plaintiff-appellant admits
that it is a "public utility corporation recognized and
existing under the laws of the Philippines. ... ."
Section 8 of Article XIV, Constitution
No franchise, certificate, or any other form of authorization for the
operation of public utility shall be granted except to citizens of the
Philippines or to corporations or other entities organized under the
laws of the Philippines, sixty per centum of the capital of which is
owned by citizens of the Philippines
Section 16a, CA No. 146, (Public Service Law)
Certificates of public convenience and necessity will be granted only to
citizens of the Philippines or of the United States or to corporations,
co-partnerships, associations or joint-stock companies constituted and
organized under the laws of the Philippines: provided, That sixty per
centum of the stock or paid-up capital of any such stock corporation,
co-partnership, association or joint-stock company must belong
entirely to citizens of the Philippines or of the United States
Commonwealth Act No. 108 (Anti Dummy Law)
SECTION 1. In all cases in which any constitutional or legal provision
requires Philippine or United States citizenship as a requisite for the
exercise or enjoyment of a right, franchise or privilege, any citizen of
the Philippines or the United States who allows his name or citizenship
to be used for the purpose of evading such provision, and any alien or
foreigner profiting thereby, shall be punished by imprisonment for not
less than two nor more than ten years, and by a fine of not less than
two thousand nor more than ten thousand pesos.
The fact that the citizen of the Philippines or of the United States
charged with a violation of this Act had, at the time of the acquisition
of his holdings in the corporations or associations referred to in section
two of this Act, no real or personal property, credit or other assets the
value of which shall at least be equivalent to said holdings shall be
admissible as circumstantial evidence of a violation of this Act.
SEC. 2. In all cases in which a constitutional or legal provision requires
that, in order that a corporation or association may exercise or enjoy a
right, franchise or privilege, not less than a certain per centum of its
capital must be owned by citizens of the Philippines or the United
States, or both, it shall be unlawful to falsely simulate the existence of
such minimum of stock or capital as owned by such citizens of the
Philippines or the United States or both, for the purpose of evading said
provision. The president or manager and directors or trustees of
corporations or associations convicted of a violation of this section
shall be punished by imprisonment for not less than two nor more than
ten years, and by a fine of not less than two thousand nor more than
ten thousand pesos.
SEC. 2-A. 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
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qualifications required by the Constitution or existing laws to acquire, corporation or association. This theory offends all logic
use, exploit or enjoy a right, franchise, privilege, property or business,
or reason, which could not have been intended by
the exercise and enjoyment of which are expressly reserved by the
Constitution or existing laws to citizens of the Philippines or of any Congress in enacting Republic Act No. 134 purposely
other specific country, intervene in the management, operation, fashioned to implement and strengthen the provisions of
administration or control thereof, whether as an officer, employee or Commonwealth Act No. 108.
laborer therein with or without remuneration except technical
personnel whose employment may be specifically authorized by the
President of the Philippines upon recommendation of the Department
Heads concerned, if any, and any person who knowingly aids, assists
or abets in the planning, consummation or perpetration of the acts
hereinabove enumerated shall be punished by imprisonment for not
less than five nor more than fifteen years, a by a fine of not less than
the value of the right, franchise, privilege enjoyed or acquired in
violation of the provisions here but in no case less than five thousand
pesos: Provided, however That the president, managers, or persons in
charge of corporations, association, or partnerships violating the
provisions this section shall be criminally liable in lieu thereof:
Provided, further, That any person, corporation or association shall,
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.

SEC. 3. Any corporation or association violating any of the provisions

of this Act shall, upon proper court proceedings, be dissolved.

The purpose of the anti-dummy law was to plug all

loopholes that circumvent our nationalization laws

The policy or purpose of the amendatory law, Republic

Act No. 134, in inserting Clause 3 in Section 2-A of
Commonwealth Act No. 108 was to plug all loopholes
that may be utilized by designing foreigners to
circumvent the nationalization laws of the country,
regardless of whether such laws provide for complete or
only partial nationalization of the right, franchise,
privilege, property or business covered thereby.

Furthermore, the law does not distinguish between

party and wholly nationalized businesses

The law does not distinguish between wholly and partly

nationalized businesses. It is axiomatic that where the
law does not distinguish, WE should not make any
distinction.

Luzons interpretation of the law would lead to an

absurd conclusion where a partly nationalized
corporation would have more rights than a wholly
nationalized corporation.

Under Luzons contention, a partially nationalized

corporation or association will not be liable under the
questioned provision of Section 2-A of Commonwealth
Act No. 108, as amended, for employing non-American
aliens in the management, operation, administration or
control of the business; whereas a Filipino citizen or a
wholly nationalized corporation or association
operating the same business is subject to the penal
provision of the law if he or it maintains in his or its
employ non-American aliens. This would grant more
rights and greater immunities to a partially nationalized
corporation or association, a mere creature of the law,
than to a Filipino citizen or a completely nationalized
CHAN GOMASAN OF SITO BERDE