Law Summary
Definition and Prohibition of Unauthorized Participation
- Applies to any person, corporation, or association holding rights, franchises, privileges, property, or business reserved by the Constitution or laws to Filipino citizens or qualified corporations.
- Prohibits permitting unauthorized persons or entities (aliens or those not meeting constitutional qualifications) to exploit, use, or enjoy such reserved rights or properties.
- Forbids leasing, transferring, or conveying such rights to unauthorized persons or entities.
- Specifically prohibits unauthorized intervention in management, operation, administration, or control of the reserved rights or businesses, whether as officers, employees, or laborers, except for technical personnel authorized by the Secretary of Justice.
Penalties for Violations
- Imposes imprisonment ranging from 5 to 15 years.
- Imposes fines not less than the value of the right, franchise, or privilege enjoyed or acquired unlawfully, but in no case less than five thousand pesos.
- Holds presidents, managers, or responsible persons in corporations or associations criminally liable.
- Provides for forfeiture of the right, franchise, privilege, and property or business obtained in violation of the law, in addition to penalties.
Exceptions Regarding Alien Representation in Governance
- Allows election of aliens as members of the board of directors or governing body of corporations engaged in partially nationalized activities.
- Alien representation must be in proportion to their equity share or allowable participation in the entity.
Effective Date
- The amendment takes effect immediately upon issuance.
This decree effectively reinforces the protection of national patrimony by limiting when and how foreigners can participate in certain economic activities, while providing a clear legal basis for their limited involvement proportionate to their capital investment.