Hon. Jaime C. Laya

October 29, 1984 Hon. Jaime C. Laya Minister Ministry of Education, Culture and Sports Palacio del Governador Building Plaza de Roma Intramuros, Manila Dear Minister Laya: I have received the draft of your proposed ruling on the proposed share acquisition by the Maharishi group in the University of the East. Further to our previous letter to you, dated October 4, 1984, we have certain comments on the legal aspects of the matter particularly as they would be interpreted and administered by the Commission. prcd 1. Foreigners may only indirectly invest in educational institutions, under the prescriptive provision of Article XV, Section 8(7) of the Constitution, which states that educational institutions "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".Direct ownership of educational institutions is therefore limited to Filipino citizens and corporations or associations not only owned by Filipino citizens but controlled by them to the extend of at least 60% of the capital thereof. The permissible ownership of foreigners in educational institutions is only indirect, to the extent of not more than 40% of the capital of corporations or associations which own educational institutions. 2. It follows that foreigners are prohibited from having anything to do with the control and administration of educational institutions as specifically provided in Article XV, Section 8(7) of the Constitution: "The control and administration of educational institutions shall be vested in citizens of the Philippines". Section 2 of Presidential Decree No. 176, issued on April 16, 1973, also provides: "Membership in the governing bodies or boards of such educational institutions shall be limited to citizens of the Philippines". This requirement naturally flows from the ownership restriction which contemplates that foreigners would not directly own educational institutions and that their indirect ownership would be limited to a non-controlling percentage. 3. Applying the foregoing principles to the University of the East (UE),which is an educational institution organized as a stock corporation, i.e.,an educational corporation: (a) Foreigners may not directly invest in shares of UE. (b) Age of Enlightenment Foundation of the Philippines, Inc. (AEFPI),which is a non-stock corporation organized under the laws of the Philippines, appears to be at least 60% owned by Filipino citizens (from records at the SEC) and may be an owner of UE shares. (c) Maharishi Educational Foundation (MEF) which is not organized under the laws of the Philippines nor licensed to do business in the Philippines, does not appear to be at least 60% owned by Filipino citizens and therefore may not be an owner of UE shares. cdlex (d) It does not appear relevant whether AEFPI and MEF are charitable organizations unless UE is itself considered established by such organizations, as an exemption from the Filipino ownership requirement of the Constitution for educational institutions. Thank you for your consideration. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman