Whether Stock Higher Education Institutions Are Now Entitled to Government Grants upon Compliance with the Qualification Requirements of RA No. 10055 (Philippine Technology Transfer Act of 2009)

DOJ OPINION NO. 22, s. 2021 July 28, 2021 Mr. J. Prospero E. De Vera III, DPA Chairman Commission on Higher Education Higher Education Development Center Building C.P. Garcia Avenue, UP Campus Diliman, Quezon City Dear Chairman De Vera : This refers to your request for legal opinion on whether the repealing clause of Republic Act (RA) No. 10055, 1 or the Philippine Technology Transfer Act of 2009, amended Section 25 of RA No. 7798, 2 such that stock Higher Education Institutions (HEIs) are now entitled to government grants as long as they are compliant with the qualification requirements of RA No. 10055. HTcADC You stated that RA No. 7722, otherwise known as the Higher Education Act of 1994, authorized the Commission on Higher Education (CHED) to provide grants or subsidies for the development of policies and programs on research. However, under RA No. 7798, which amended Section 25 of Batas Pambansa (BP) Blg. No. 232, only HEIs organized as non-stock corporations may avail of grants and/or subsidies. You also stated that Section 4 (i) of RA No. 10055 does not distinguish HEIs eligible for research funding. You pointed out that Section 28 of RA No. 10055 "contains a general repealing provision, which predicates any intended repeal under the condition that substantial conflict must be found in existing and prior acts." Hence, your query. We answer in the negative. We stress, at the outset, that repeals of laws by implication are not favored. The mere repugnance between two statutes should be very clear in order to warrant the court in holding that the later in time repeals the other, when it does not in terms purport to do so. 3 As will be discussed below, Section 25 of BP Blg. 232, as amended by RA No. 7798, can be harmonized with RA No. 10055 and that RA No. 7798 and RA No. 10055 can stand together, they being not inconsistent with each other. Discussion 1. BP Blg. 232 (Education Act of 1982) Section 25 reads Section 25. Establishment of Schools . All schools shall be established in accordance with law. The establishment of new national schools and the conversion of existing schools from elementary to national secondary or tertiary schools shall be by law: Provided, That any private school proposed to be established must incorporate as an non-stock educational corporation in accordance with the provisions of the CorporationCode of thePhilippines. This requirement to incorporate may be waived in the case of family-administered pre-school institutions. Government assistance to such schools for educational programs shall be used exclusively for that purpose. Section 25 states that all learning or educational institutions shall be established in accordance with law. More specifically, the law mandates that private schools must incorporate as a non-stock educational corporation in accordance with the Corporation Code while relaxing the incorporation requirement with regard to family-administered pre-school institutions. In recognition of its complementary role in the educational system, the government may extend assistance to the programs of private schools. Section 41 states Section 41. Government Assistance . The government, in recognition of their complementary role in the educational system, may provide aid to the programs of private schools in the form of grants or scholarships, or loans from government financial institutions: Provided, That such programs meet certain defined educational requirements and standards and contribute to the attainment of national development goals. On 25 August 1994, RA No. 7798 was passed into law, amending Section 25 of BP Blg. 232. The amended Section 25 of BP Blg. 232 now reads: Sec. 25. Establishment of Schools. All schools shall be established in accordance with law. The establishment of new national schools and the conversion of existing schools from elementary to national secondary schools or from secondary to national secondary or tertiary schools shall be by law: Provided, That any private school proposed to be established must incorporate as either a non-stock or a stock educational corporation in accordance with the provisions of the CorporationCode of thePhilippines. This requirement to incorporate may be waived in the case of family-administered pre-school institutions. Provided, That the minimum paid-up capital for stock educational institutions for those engaged in elementary education shall not be less than One million pesos (P1,000,000.00); not less than Two million five hundred thousand pesos (P2,500,000.00) for those offering both elementary and secondary education; and not less than Five million pesos (P5,000,000.00) for those offering elementary, secondary and tertiary and postgraduate courses, except existing educational institutions organized as stock corporations may automatically apply for renewal of their corporate existence when the original period is about to expire. Provided, finally, That stock educational institutions may be allowed only in capital-intensive courses of study as may be determined by the Department of Education, Culture and Sports, the Commission on Higher Education, and the Department of Science and Technology, as the case may be. Any school that is established or organized as a stock corporation shall be ineligible for any form of government subsidy, incentive or assistance , except those given to individual students and teachers in the form of scholarships, student loans or other forms of subsidy as already mandated under existing law. Government assistance to non-stock schools for educational programs shall be used exclusively for that purpose. Taxes shall not be due on donations to educational corporations. [Emphasis supplied] The amendment removed the general requirement that private schools shall incorporate as non-stock corporations only, allowing them to incorporate either as non-stock or stock corporations. Further, the amendment imposed a strict requirement on the eligibility of private schools for any form of government subsidy, incentive or assistance. CAIHTE With the amendment, private schools are now allowed to organize as stock corporations in accordance with the thresholds for paid-up capital stock per level of education. Clearly, it did not amend the eligibility requirement for subsidy, incentive or assistance from the government. The intention of both BP Blg. 232 and RA No. 7798 remained the same, that is, only private schools established as non-stock corporations are qualified to receive government subsidy, incentive or assistance. 2. RA No. 7722 (Higher Education Act of 1994) The CHED was created in keeping with the State's policy to protect, foster and promote the right of all citizens to affordable quality education at all levels and to ensure that education shall be accessible to all. Section 3 of RA No. 7722 reads Section 3. Creation of the Commission on Higher Education . In pursuance of the above mentioned policies, the Commission on Higher Education is hereby created, hereinafter referred to as the Commission. The Commission shall be independent and separate from the Department of Education, Culture and Sports (DECS), and attached to the Office of the President for administrative purposes only. Its coverage shall be both public and private institutions of higher education as well as degree-granting programs in all post-secondary educational institutions, public and private. Readily apparent is CHED's primary mandate to supervise institutions of higher education, both public and private, as well as degree-granting programs in all post-secondary educational institutions, public and private. Higher education refers to the stage of formal education, or its equivalent, requiring completion of secondary education and covering programs of study leading to bachelor and advanced degrees, including associate degrees. 4 To achieve the aims and objectives of RA No. 7722 and pursuant to the mandate of CHED, the law established the Higher Education Development Fund (Fund) to strengthen higher education in the country. Sections 10 and 11 of RA No. 7722 state Section 10. The Higher Education Development Fund . A Higher Education Fund, hereinafter referred to as the Fund, is hereby established exclusively for the strengthening of higher education in the entire country. Section 11. Management and Administration of the Higher Education Development Fund . The Fund shall be administered by the Commission. For sound and judicious management of the Fund, the Commission shall appoint a reputable government financial institution as portfolio manager of the Fund, subject to the following conditions. As the fund administrator, CHED was tasked to prepare the necessary guidelines for the use of the Higher Education Development Fund subject to the conditions enumerated in the same Section 11. This also runs parallel with CHED's function to "develop criteria for allocating additional resources such as research and program development grants, scholarships, and other similar programs." 5 Notably, the allocation of resources through grants and other forms of assistance, subject to certain defined educational requirements and standards, is consistent with Sections 25 and 41 of BP Blg. 232, as amended by RA No. 7798. 3. RA No. 10055 (Philippine Technology Transfer Act of 2009) RA No. 10055 aims to promote and facilitate the transfer, dissemination, and effective use, management, and commercialization of intellectual property, technology and knowledge resulting from research and development funded by the government for the benefit of national economy and taxpayers. 6 For purposes of this opinion, some concepts or terms are worth considering. The definition of terms in Section 4 of RA No. 10055 pertinently provides Section 4. Definition of Terms . For purposes of this Act: (g) "Government Funding Agency (GFA)" refers to any government agency or instrumentality, or government-owned and/or -controlled corporation that provides research grants and other technical and material support, from government appropriations and resources and those sourced from government-managed Official Development Assistance (ODA) funds. (i) "Research and Development Institute or Institution (RDI)" refers to a public or private organization, association, partnership, joint venture, higher education institution or corporation that performs R&D activities and is duly registered and/or licensed to do business in the Philippines, or otherwise with legal personality in the Philippines. In the case of private RDIs, they shall be owned solely by the citizens of the Philippines or corporations or associations at least sixty per centum (60%) of the capital of which is owned by such citizens. This does not include RDIs covered by international bilateral or multilateral agreements. (r) "Research and Development (R&D)" refers to creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and to use this stock of knowledge to devise new applications. [Emphasis supplied] The law applies, among others, to R&D activities carried out by RDIs, including HEIs, receiving grants and other technical and material support directly from the government funding agencies, sourced from government appropriations and resources and from government-managed Official Development Assistance (ODA). Its general repealing clause is found in Section 28, and reads Section 28. Repealing Clause . All laws, presidential decrees, executive orders, presidential proclamations, rules and regulations or parts thereof which may be contrary to or inconsistent with this Act are hereby repealed or modified accordingly. RA No.10055 did not repeal Section 25 of BP Blg. 232, as amended by RA No.7798 To reiterate, repeals of laws by implication are not favored. In Valera vs. Tuason, et al. , 7 the Supreme Court ruled in this wise One of the well-established rules of statutory construction enjoins that endeavor should be made to harmonize the provisions of a law or two laws so that each shall be effective. In order that one law may operate to repeal another law, the two laws must actually be inconsistent. The former must be so repugnant as to be irreconcilable with the latter act. ( U.S.vs.Palacios , 33 Phil. 208.) Merely because a later enactment may relate to the same subject matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the latter, since the new law may be cumulative or a continuation of the old one. (Statutory Construction, Crawford, p. 634.) Section 25 of BP Blg. 232, as amended by RA No. 7798, and the pertinent provisions of RA No. 10055 can stand together. Section 25 requires that in order for a private school to be eligible for any form of government subsidy, incentive or assistance, it must be a non-stock corporation. The provision does not indicate whether such private school is in the elementary, secondary or tertiary level. Moreover, the provision does not specify in what areas of study may such government subsidy, incentive or assistance be provided. It generally mentions that such subsidy, incentive or assistance is intended for educational programs. On the other hand, RA No. 10055 specifically applies to RDIs, including HEIs, that undertake R&D activities through grants received directly from the government. Section 5 thereof enumerates the scope and application of the law, viz. : Section 5. Coverage . (a) All R&D activities carried out on behalf and for the interest of the Philippine government by RDIs receiving grants directly from the GFAs; (b) All intellectual property rights derived from R&D activities funded by government; (c) All government agencies that fund R&D activities as well as provide financial, technical or material support to such R&D activities; and (d) All institutions that implement government funded R&D. The above provision should be read in conjunction with Section 4 that defines RDI. To be clear, there is nothing in RA No. 10055 which prescribes the requirements in order for a private school, more specifically an HEI, to be eligible for funding, or any form of subsidy, incentive, or assistance from the government. There is likewise nothing in RA No. 10055 which states that an HEI, whether incorporated as a stock or a non-stock corporation, is now eligible for funding or any form of subsidy, incentive or assistance from the government. Since RA No. 10055 provides the framework for the transfer of technology related to R&D, and considering that it applies, among others, to HEIs performing R&D activities with direct funding from the government, it presupposes that any such HEI grantee has complied with the requirements set by existing laws for receiving such funding or grants. Applying the Supreme Court's ruling in Valera vs. Tuason to the present query, Section 25 of BP Blg. 232, as amended by RA No. 7798, can be harmonized with RA No. 10055. RA No. 7798 and RA No. 10055 are two laws that are not inconsistent with each other. There is nothing so repugnant in RA No. 7798 as to be irreconcilable with RA No. 10055, and vice versa. HEITAD HEIs incorporated as stock corporations are ineligible for government funding or assistance Given that RA No. 10055 did not repeal RA No. 7798, necessarily, HEIs established as stock corporations remain ineligible for funding, or any form of subsidy, incentive, or assistance from the government. The requirement laid down by Section 25 of BP Blg. 232, as amended by RA No. 7798 subsists; that is, private schools, including HEIs, incorporated as stock corporations are ineligible to receive any form of government subsidy, incentive or assistance for educational programs including R&D activities. The two laws are independent of each other, and are intended to operate side by side. Please be guided accordingly. Very truly yours, (SGD.) MENARDO I. GUEVARRA Secretary Footnotes 1. An Act Providing the Framework and Support System for the Ownership, Management, Use, and Commercialization of Intellectual Property Generated from Research and Development Funded by Government and Other Purposes. 2. An Act Amending Section 25 of Batas Pambansa Blg. 232, Otherwise Known as the "Education Act of 1982." 3. The Manila Railroad Company vs. James Rafferty, as Collector of Internal Revenue , G.R. No. 14205, September 30, 1919. 4. Section 3 (c), RA No. 10931 (Universal Access to Quality Tertiary Education Act). 5. Section 8 (i), RA No. 7722. 6. Section 3, RA No. 10055. 7. Rosario Valera, assisted by her husband, Juan Valera vs. Mariano Tuason, Jr., et al. , G.R. No. L-1276, April 30, 1948.