VICENTE LUY vs. JAMES HONG TO TAN

[LC-LQ NO. 92-0254. May 5, 1992.] FOR: SEC 4(2) Article XIV, Cons titu tion and Implemented by P.D. 1 7 6 of the DECS, in relation to C.A. No. 1 0 8, otherwise known as the "Anti-D um my Law" IN THE MATTER OF GRACE CHRISTIAN HIGH SCHOOL, INC. VICENTE LUY , complainant , vs .JAMES HONG TO TAN (JAMES LEE TAN) , respondent . R E S O L U T I O N This is a letter complaint dated 2 January 1992 filed by complainant Vicente Luy, against JAMES HONG TO TAN (JAMES LEE TAN), a citizen of the United States of America, for violation of the second full paragraph of Section 4(2) of Article XIV of the Constitution of the Philippines (1986), as implemented by P.D. No. 176 and the Implementing Rules and Regulations issued by the Department of Education, Culture and Sports (DECS), in relation with Commonwealth Act No. 108, as amended, otherwise known as the "Anti-Dummy Law". Complainant alleged the following antecedent facts: For the years 1988, 1989, 1990 and 1991, respondent served as a member of the Board of Trustees of Grace Christian High School Inc. For what ever reason, the school has not filed with the Commission a General Information Sheet (GIS) for the year 1991. However, the School has filed its GIS under oath for the years 1988, 1989 and 1990, wherein respondent was listed as an incumbent member of the Board of Trustees. Apart from said official information it is common knowledge that said respondent has been serving as a director for many years now. Respondent in good faith actively represents to third parties that he is the Vice Principal of the School and in fact discharging said function by delegation from the President. Records will show that respondent is a citizen of the United States of America. He was registered at the Commission on Immigration (CID) as an alien and that he had amended his nationality to that of American on August 18, 1987. In view of the foregoing, complainant prayed that the matter be investigated and, after notice and hearing, declares respondent James Hong To Tan (James Lee Tan ) to be disqualified from membership in the Board of Trustees of the school and from holding any position therein which involves administrative or executive discretion in the management and direction of the affairs of the school. Likewise, respondent has been implicated in a complaint lodged by a certain Mr. JOHNY CHANG, Founder, Grace Christian High School (GCHS), PTA, dated June 13, 1991, before the Commission on Immigration (CID, whereby complainant alleged violation committed by GRACE CHRISTIAN HIGH SCHOOL for engaging the services of JAMES TAN, an American citizen, as the School's Vice-Principal, in violation of Section 4(2), Article XIV of the Philippine Constitution which provides that the control and administration of educational institutions shall be vested in the citizens of the Philippines. Same complainant, Johny Chang, pursue similar complaint against herein respondent before the Office of the Public Prosecutor, (Quezon City, in I.S. No. 91-14724, invoking therein the criminal aspects of the Anti-Dummy Law and P.D. No. 176. On January 21, 1992, this Office notified the complainant and respondent for a conference and/or clarificatory questions. Both parties appeared on February 5, 1992 and the respondent was directed to comment/answer the complaint. In his answer dated March 12, 1992, respondent admitted that James Lee Tan is a native born resident of the Philippines who later acquired an American citizenship. It was also admitted that he is presently holding the position of Vice-Principal at the school. Respondent, however, argued that he has the necessary working permit issued by the Department of Labor and Employment. Likewise, respondent averred that the constitutional provision that educational institution shall be owned solely by citizens of the Philippines admits of exception, and that those established by religious groups and mission boards are not covered by the Constitutional prohibitions. And since, GRACE CHRISTIAN HIGH SCHOOL was established by a mission board as alleged, the same squarely falls under the exception. The main issue in the case at bar is whether or not said respondent, admittedly an alien, may constitutionally serve on the Board of Trustees of GRACE CHRISTIAN HIGH SCHOOL and at the same time, hold managerial position/function as Vice-Principal thereof. This Commission, after careful evaluation of the case records as well as the evidence adduced by both parties, finds the arguments of the complainant to be meritorious. Section 4 of Article XIV of the New Constitution reads in full, as follows, (emphasis provided) "(1) The state recognizes the complementary roles of public and private institutions in the education system and shall exercise reasonable supervision and regulation of all educational institutions. (2) Educational institution, other than those established by religious groups and mission boards, shall be owned solely by citizens of the Philippines or corporations or associations at least 60% of the capital of which is owned by such citizens. The congress, may, however, require increased Filipino equity participation in all educational institutions. The control and administration of educational institutions shall be vested in citizens of the Philippines. No educational institution shall be established exclusively for aliens and no group of aliens shall comprise more than one-third of the enrollment in any school. The provisions of this subsection shall not apply to schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law for other foreign temporary residents." The second full paragraph of subsection (2) stated above, bears repeating, to wit: "THE CONTROL AND ADMINISTRATION OF EDUCATIONAL INSTITUTIONS SHALL BE VESTED IN CITIZENS OF THE PHILIPPINES." The aforesaid paragraph refers specifically to the control and administration of an educational institution, and does not treat of the matter of ownership as that is dealt with by the separate and independent paragraph that immediately precedes it. The question that may be posed is: Is the above-quoted paragraph so ambiguous as to require construction or interpretation? Clearly, the concept of control and administration is distinguishable from the concept of "ownership".By no stretch of construction or interpretation may the exception from the ownership rule of the schools, if actually one was established by a religious group or mission board, be extended to and constitute exceptions to the "control and administration" rule, for the only exceptions thereto, are found in the next paragraph, VIZ.,schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreign temporary residents. The respondent invokes paragraph 1 of P. D. No. 176 citing the exemptions to the OWNERSHIP REQUIREMENT, i.e., schools established by religious orders, mission boards and charitable organizations, and argued that these likewise constitute exemptions to the CONTROL AND ADMINISTRATION requirements. Said paragraph 2 provides: "The control and administration of all educational institutions already established or hereafter to be established in the Philippines shall be vested in citizens of the Philippines. Membership in the governing bodies or boards of such educational institutions shall be limited to citizens of the Philippines. Appointments and designations to, and employment in, positions involving the exercise of administrative discretion in the management of such educational institutions shall likewise be limited to citizens of the Philippines." This Commission disagrees. The language thereof cannot accommodate such a forced and strained construction. In fact, because of the above-quoted paragraph 2 of Presidential Decree No. 176, limiting membership in the governing bodies or board of schools to citizens of the Philippines, there is no room for the application to non-profit educational institution of the Anti-Dummy Law rule that "election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such entities", (final sentence Section 2-A, C. A. 108, Anti-Dummy Law was added by Presidential Decree No. 715 on May 28, 1975 and by its own policy statement (WHEREAS clauses), made it clear that such relief was being extended to "foreign investors" with "equity" in corporations and associations engaged in partially nationalized activities which clearly are profit-oriented because the concept of "equity" is alien to a non-profit organization such as the school. Furthermore, if on the one hand Respondent claims he is a missionary for a religious group or mission board, then he can hardly qualify himself to be an "investor" with a profit motive evidenced by his holding "equity" in the school. The respondent also argued that "For if religious groups and mission boards are allowed to establish and fully own educational institution in the Philippines, common sense dictates that it follows logically that they can also manage and control the same".This Commission believes that this view is absolutely negated by the Constitutional provisions, particularly, the second full paragraph of Section 4(2) of Article XIV. Finally, in SEC Opinion dated May 22, 1991 addressed to one Atty. G. Batiller, Jr., this Commission opined that Presidential Decree 176, the law which implements the pertinent provisions of the 1973 Constitution and limits the membership in the Board of Directors of Educational institutions to citizens of the Philippines, remains operative until amended, repealed or revoked, by express provision of Article XVIII, Section 3 of the 1986 Constitution. (Emphasis ours). Thus, in the case of United Doctors Medical City (UDMC) which operates a School of Nursing, a Japanese investor holding equity in UDMC was not qualified to seek election to the Board of Directors, it being considered as an educational institution. Moreover, the Opinion further states that "while foreign equity participation may be allowed to the extent of 40% of the capital stock of the corporation, FOREIGNERS ARE BARRED FROM BEING ELECTED AS MEMBERS OF THE BOARD OF DIRECTORS." The constitution vests the control and administration of educational institutions only upon citizens of the Philippines and since the Board of Trustees of the School and Vice-Principalship position are considered as administration positions, it follows that members of school Board and principalship or vice-principalship item should be filled by Filipino citizens. WHEREFORE, foregoing considered this Commission hereby orders Grace Christian High School to disqualify James Lee Tan (James Hong To Tan) from membership in the Board of Trustees of the subject school within thirty(30) days from receipt of his Resolution. Further, Grace Christian High School is likewise directed to remove and/or exclude the aforesaid respondent from holding any position involving administrative or executive discretion in the management and direction of the affairs of the school within the same period herein-above stated. Let also copies of this Resolution be furnished the Department of Education, Culture and Sports for its further appropriate action. SO RESOLVED. Prosecution and Enforcement Recommending Approval: Department (SGD.) VILLAMIN P. LAM (SGD.) ROMMEL G. OLIVA Chief, Prosecution Division Attorney III Approved: (SGD.) ELNORA E. ADVIENTO Director