Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1910
File No. 811B.5034.
The Acting Secretary of State to the Belgian Minister.
Washington, May 2, 1910.
Sir: I beg to transmit herewith, for your information, a copy of an opinion rendered by the Attorney General, dated April 29, 1910, upon the question presented by Mr. Ed. C. André, through you, as to the legal right of a Belgian corporation to purchase and hold a plantation in the Philippine Islands containing an area of 1,430 hectares. As will be observed, the Attorney General holds that under the law no foreign or domestic corporation authorized to engage in agriculture may purchase or hold lands in the Philippines in excess of 1,024 hectares.
The Attorney General to the Secretary of State.
Washington, April 29, 1910.
Sir: I have the honor to acknowledge the receipt of your communication o April 21, instant, in which you state:
I have the honor to inclose copies of two notes addressed, respectively, to the minister of foreign affairs at Brussels by Mr. Ed. C. André, dated April 4, and to the Belgian minister at this capital by the minister of foreign affairs of his Government, dated April 17, and with them three letters from Mr. André, dated March 30 and April 4, addressed to you and handed to me by the minister of Belgium for delivery to you. These documents raise the question whether a Belgian corporation authorized to engage in agriculture may legally purchase and hold a plantation in the Philippine Islands containing an area of 1,430 hectares. The collateral inquiry is also presented whether, if the answer to the foregoing question is in the negative, an agricultural and commercial corporation created under Philippine law may take and hold the said plantation.
You request an expression of my opinion on both of these questions
The act of Congress entitled “An act temporarily to provide for the administration of the affairs of civil government in the Philippine Islands, and for other purposes,” approved July 1, 1892, is the law still in force.
By the seventy-fifth section of that act it is provided:
That no corporation shall be authorized to conduct the business of buying and selling real estate or be permitted to hold or own real estate except such as may be reasonably necessary to enable it to carry out the purposes for which it is created, and every corporation authorized to engage in agriculture shall by its charter be restricted to the ownership and control of not to exceed one thousand and twenty-four hectares of land. * * *
The first clause of this section forbids the organization of corporations to conduct the business of buying and selling real estate. The next, recognizing the necessity of some corporations to hold real estate for the conduct of their business, denies the permission to hold or own any real estate except such as may be reasonably necessary to enable it to carry out the purposes for which the corporation is created. The holding of real estate, under this provision, is incidental to the main business of the corporation, such as manufacturing or trading. By no intentment can this apply to a corporation formed for the use or cultivation of land.
By the next clause of this section it is provided:
Every corporation authorized to engage in agriculture shall by its charter be restricted to the ownership and control of not to exceed one thousand and twenty-four hectares of land.
Mr. André suggests, in one of the notes transmitted through you: “I am in doubt whether this refers to the rules and by-laws of the corporation or to the privilege granted to a company at being filed.”
This provision is not directory. It affects the very being of the corporation. It is an absolute prohibition of the power to hold land in excess of 1,024 hectares. “This limitation was placed on the act after much debate and deliberation in the United States Congress, and it is repeated and emphasized in all the legislation upon this subject.
These prohibitions in the organic act were embraced in the “corporation law” of the Philippine Commission, enacted by authority of the United States. By Article I, section 13, it is enacted:
Every corporation has power (par. 5) to purchase, hold, convey, sell, lease, let, mortgage, encumber, and otherwise deal with such real and personal property as the purposes for which the corporation was formed may permit and the transaction of the lawful business of the corporation may reasonably and necessarily require, unless otherwise prescribed in this act: Provided, That no corporation shall be authorized to conduct the business of buying and selling real estate or be permitted to hold or own real estate except such as may be reasonably necessary to enable it to carry out the purposes for which it is created, and every corporation authorized to engage in agriculture shall be restricted to the ownership and control of not to exceed one thousand and twenty-four hectares of land. * * *
Reversing the order in which the questions in your communication are presented to me, and replying to the second inquiry, I think an agricultural corporation created under Philippine law can not take and hold of the plantation described, or of any other lands, more than 1,024 hectares.
By the last paragraph of this same section 75 of the act of Congress it is provided:
Corporations not organized in the Philippine Islands, and doing business therein, shall be bound by the provisions of this section so far as they are applicable.
And by section 73 of the “corporation law” of the Philippine Commission it is enacted:
Any foreign corporation or corporation not formed, organized, or existing under the laws of the Philippine Islands and lawfully doing business in the islands shall be bound by the laws, rules, and regulations applicable to domestic corporations of the same class, save and except such only as provide for the creation, formation, organization, or dissolution of corporations or such as fix the relations, liabilities, responsibilities, or duties of members, stockholders, or officers of corporations to each other or to the corporation: Provided, however, That nothing in this section contained shall be construed or deemed to impair any rights that are secured or protected by the treaty of peace between the United States and Spain, signed at the city of Paris on December tenth, eighteen hundred and ninety-eight.
This act was passed under the authority delegated by the organic act. Its provisions are declaratory of the limitations of that act.
The restrictions upon the ownership and control of lands in the Philippine Islands by corporations are absolutely determined by this legislation. It is beyond the power of the executive branches of the Governments, either of the United States or the Philippine Islands, to authorize or permit corporations to own or hold lands in excess of the amount so designated.
I am therefore of opinion that neither a corporation formed in Belgium to acquire and possess lands in the Philippine Islands nor any other foreign or domestic corporation authorized to engage in agriculture may legally purchase or hold more than 1,024 hectares of land in the Philippine Islands.
I have, etc.,