File No. 811B.5034.
[Inclosure.]
The Attorney General
to the Secretary of State.
Department of Justice,
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.
[Page 81]
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.,
