Minister Jaime C. Laya

October 4, 1984 Minister Jaime C. Laya Ministry of Education, Culture and Sports Palacio del Governador Building Plaza de Roma, Intramuros Manila Dear Minister Laya, This refers to your letter dated September 25, 1984, requesting the guidance of this Commission on the corporate and legal implication of the purchase of shares of stock of educational institutions by foreign interests. It appears therein that a foreign group known as Age of Enlightenment or Maharishi/Unified Field, reportedly acting through a domestic corporation is contemplating the purchase of the issued and outstanding shares of certain universities incorporated as stock corporation and which own real estate. The shares could be voting shares only and/or regular common shares. Anent thereto, Section 8(7), Article XV of the Constitution of the Philippines provides, thus: "Educational institutions, other than those established by religious orders, mission boards, and charitable organizations, shall be owned solely by citizens of the Philippines, or corporations or associations sixty per centum of the capital of which is owned by such citizens. 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 sub-section shall not apply to schools established for foreign diplomatic personnel and their dependents, and otherwise provided by law, for other foreign temporary residents. xxx xxx xxx (Emphasis supplied) The above-quoted provision of the Constitution has indubitably spelled out and defined a redirection of the national policy relative to the ownership with certain specific exceptions, as well as on the control and administration of all educational institutions that should be allowed to operate in the Philippines (prefatory paragraph, P.D. No. 176). Corollary thereto, the pertinent provisions of P.D. No. 176, issued on April 16, 1973, implementing Section 8(7), Article XV of the New Constitution are quoted hereunder: "1. Ownership. All educational institutions, other than those which are already established or which may hereafter be established by religious orders, mission boards and charitable organizations, shall be owned solely by citizens of the Philippines, or corporations or associations at least sixty per centum (60%) of the capital of which is owned by such citizens. xxx xxx xxx 2. Control and Administration. 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. The Secretary of Education is hereby authorized to fix the reasonable period within which any educational institution may comply with the requirements embodied in this section: Provided, however, that full compliance therewith shall be effected not later than the beginning of the school year 1976-77. cdlex xxx xxx xxx Furthermore, under paragraph 2 of the Rules and Regulations for the Implementation of Presidential Decree No. 176 on alien schools, "the Filipinization policy on ownership, control and administration shall also take effect immediately for schools already established or which may hereafter be established". Educational institutions are governed by special laws and by the general provisions of the Corporation Code (Sec. 106, The Corporation Code of the Philippines). Thus, pursuant to the specific provisions of the Constitution and P.D. No. 176, it is advised that, subject to the exceptions provided for by said laws, only citizens of the Philippines, or corporations or associations sixty percent of the capital of which is owned by such citizens may subscribe to or purchase the shares of stock of educational institutions . A perusal of the record of the Age of Enlightenment Foundation of the Philippines, Inc. (Formerly: Foundation for the Association of the Age of Enlightenment (FAAE),Inc.),on file in this Commission, shows that as of 1979, the association has a Philippine nationality, it appearing that all the members thereof are Filipino citizens. As to whether or not the Foundation is qualified under the law to purchase the issued and outstanding shares of educational institutions depends on the citizenship of its present members. Hence, it is necessary that the membership book of the Foundation be duly presented and verified; if at least 60% of the members thereof are Filipinos, then the Foundation will be recorded to be of Philippine nationality, and thus, qualified under the law to be a stockholder of educational institutions. Please be guided accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman