Foreigners as bank officers

For foreigners to be employed in corporations which the law requires to be at least 60% Filipino-owned, prior authorization from the Department of Justice (DOJ) is a requirement, as provided under the Anti-Dummy law. In addition there are two requirements to be obtained from the Department of Labor and Employment (DOLE), namely, an Alien Employment Permit (AEP) and the approval for the company’s Understudy Training Program (UTP) designed to transfer knowledge and skills from the foreign national to the Filipino worker.

Exempted from getting the AEP are permanent resident nationals and probationary or temporary resident visa holders. On the other hand, among those excluded from securing the AEP are corporate officers as provided under the Corporation Code, such as the president, secretary and treasurer. Regarding the UTP, the Bureau of Local Employment of the DOLE clarified on October 29, 2015 that the UTP is among the documents to be submitted by employers covered by the Anti-Dummy Law. In the same advisory, the Bureau stated that the sectors covered are those listed in Executive Order (EO) No. 184 which, as may be noted, does not include the “banking sector.”

Obviously exempted from all the above requirements would be foreign banks coming into the Philippines under the Foreign Banks Liberalization Law since this law allows a foreign bank to acquire up to 100% ownership of a Philippine bank. This is the gist of the opinion of the Department of Justice stating that “certain banking activities involving the entry and operation of foreign banks in the Philippine banking system may now be deemed to have been taken out of the coverage of the Anti-Dummy Law, thereby dispensing with the need for the prior authorization of this Department with respect to the employment of foreign nationals (DOJ Opinion No. 016.s.2004). By the same logic, officerships by foreign nationals in thrift banks and rural banks can likewise be deemed taken out of the coverage of the Anti-Dummy Law since the law now allows up to 60% foreign ownership in these banks. These cases would be the exceptions to the BSP Manual of Regulations for Banks providing that except as may otherwise be allowed under the Anti-Dummy Law, foreigners cannot be officers or employees of banks.

But, as mentioned, the advisory by the Bureau of Local Employment on the submission of UTPs would not apply to the banking sector for the reason that said sector is not among the enumeration in EO No. 184 of the sectors covered by the Anti-Dummy Law. Would it mean that the banking sector in its entirety is deemed taken out of the coverage of the Anti-Dummy Law by virtue of this advisory?

My own view is that such exclusion of the banking sector would only be for purpose of the submission of the UTPs but the advisory would be inadequate by itself to supersede the requirement under the Anti-Dummy Law for corporations required to be at least 60% Filipino-owned to secure prior authorization from the Department of Justice for the employment of foreign nationals; and that, consequently, that advisory cannot serve as legal basis to exempt from the DOJ authorization the hiring of foreigners in all banks in general. ***** The above comments are the personal views of the writer. His email address is jzuniga@bsp.gov.ph