Declaration of Policy.
SEC. 33. Declaration of Policy.—It is hereby declared to be the policy of the State that the national government shall contribute to the financial support of educational programs pursuant to the goals of education as declared in the Constitution. Towards this end, the government shall:
Adopt measures to broaden access to education through financial assistance and other forms of incentives to schools, teachers, pupils and students; and
Encourage and stimulate private support to education through, inter alia, fiscal and other assistance measures.
A. Funding of Public Schools
National Funds.
SEC. 34. National Funds.—Public schools shall continue to be funded primarily from national funds: Provided, That local governments shall be encouraged to assume operation of local public schools on the basis of national fund participation and adequate revenue sources which may be assigned by the national government for the purpose.
Financial Aid and Assistance to Public Secondary Schools.
SEC. 35. Financial Aid and Assistance to Public Secondary Schools.—The national government shall extend financial aid and assistance to public secondary schools established and maintained by local governments, including barangay high schools.
Share of Local Government.
SEC. 36. Share of Local Government.—Provinces, cities and municipalities and barangays shall appropriate funds in their annual budgets for the operation and maintenance of public secondary schools on the, basis of national fund participation.
Special Education Fund.
SEC. 37. Special Education Fund.—The proceeds of the Special Education Fund accruing to local governments shall be used exclusively for the purposes enumerated in Section 1 of Republic Act No. 5447, and in accordance with rules and regulations issued by the Ministry of Education, Culture and Sports and the Ministry of the Budget. Said proceeds shall be considered a local fund and shall be subject to Presidential Decree No. 477, Presidential Decree No. 1375 and other applicable local budget laws and regulations.
Tuition and other School Fees.
SEC. 38. Tuition and other School Fees.—Secondary and post-secondary schools may charge tuition and other school fees, in order to improve facilities or to accommodate more students.
Income from other Sources.
SEC. 39. Income from other Sources.—Government-supported educational institutions may receive grants, legacies, donations and gifts for purposes allowed by existing laws.
Furthermore, income generated from production activities and from auxiliary enterprises may be retained and used for schools concerned in accordance with rules and regulations jointly issued consistently with pertinent appropriation and budgetary laws by the Ministry of the Budget, the Ministry of Education, Culture and Sports and the Commission on Audit.
B. Funding Of Private Schools
Funding of Private Schools.
SEC. 40. Funding of Private Schools.—Private schools may be funded from their capital investments or equity contributions, tuition fees and other school charges, grants, loans, subsidies, passive investment income and income from other sources.
Government Assistance.
SEC. 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.
Tuition and Other School Fees.
SEC. 42. Tuition and Other School Fees.—Each private school shall determine its rate of tuition and other school fees or charges. The rates and charges adopted by schools pursuant to this provision shall be collectible, and their application or use authorized, subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports.
Income from. Other Sources.
SEC. 43. Income from. Other Sources.—Any private school duly recognized by the government, may receive any grant and legacy, donation, gift, bequest or devise from any individual, institution, corporation, foundation, trust or philanthropic organization, or research institution or organization as may be authorized by law.
Furthermore, private schools are authorized to engage in any auxiliary enterprise to generate income primarily to finance their educational operations and/or to reduce the need to increase students' fees.
Institutional Funds.
SEC. 44. Institutional Funds.—The proceeds from tuition fees and other school charges, as well as other income of schools, shall be treated as institutional funds. Schools may pool their institutional funds, in whole, or in part, under joint management for the purpose of generating additional financial resources.
C. Incentives to Education
Declaration of Policy.
SEC. 45. Declaration of Policy.—It is the policy of the State in the pursuit of its national education development goals to provide an incentive program to encourage the participation of the community in the development of the educational sector.
Relating to School Property.
SEC. 46. Relating to School Property.—Real property, such as lands, buildings and other improvements thereon used actually, directly and exclusively for educational purposes shall be subject to the real property tax based on an. assessment of fifteen percent of the market value of such property: Provided, That all the proceeds from the payment thereof shall accrue to a special private education ment thereof shall accure to a special private education fund which shall be managed and disbursed by a local private school board which shall be constituted in each municipality or chartered city with private educational institutions with the mayor or his representative as chairman and not more than two representatives of the institutional taxpayers, and, likewise, not more than two residents of the municipality or chartered city who are alumni of any of the institutional taxpayers as members: Provided, further, That fifty percent of the additional one percent tax on real estate property provided for under Republic Act 5447, shall accrue to the special private education fund: Provided, finally, That in municipalities or chartered cities wherein the number of private institutions with individual enrollment of pupils and students over five thousand exceeds fifteen, the members of the private school board shall be increased to not more than fourteen members determined proportionately by the Minister of Education, Culture and Sports. The private school board shall adopt its own rules which shall enable it to finance the annual programs and projects of each institutional taxpayer for the following purposes; student-pupil scholarships; improvement of instructional, including laboratory, facilities and/or equipment; library books and periodicals acquisition; and extension service in the community, in that order of priority.
Relating to Gifts or Donations to Schools.
SEC. 47. Relating to Gifts or Donations to Schools.— All gifts or donations in favor of any school, college or university recognized by the Government shall not be subject to tax: Provided, That such gifts or donations shall be for improvement of classrooms and laboratory or library facilities, and shall not inure to the benefit of any officer, director, official, or owner or owners of the school, or paid out as salary, adjustments or allowance of any form or nature whatsoever, except in support of faculty and/or professorial chairs.
Relating to Earnings from Established Scholarship Funds.
SEC. 48. Relating to Earnings from Established Scholarship Funds.—All earnings from the investment of any duly established scholarship fund of any school recognized by the government, constituted from gifts to the school, and/ or from contributions or other resources assigned to said fund by the school, if said earnings are actually used to fund additional scholarship grants to financially deserving students shall be exempt from tax until the scholarship fund is fully liquidated, when the outstanding balance thereof shall be subject to tax.
School Dispersal Program.
SEC. 49. School Dispersal Program.—All gains realized from the sale, disposition or transfer of property, real or personal, of any duly established private school, college or university, in pursuance of a school dispersal program of the government or of the educational institution as approved by the government, shall be considered exempt from tax if the total proceeds of the sale are reinvested in a new or existing duly established school, college, or university located in the dispersal site, within one (1) year from the date of such sale, transfer or disposition; otherwise, all taxes due on the gains realized from the transaction shall immediately become due and payable.
Conversion to Educational Foundations.
SEC. 50. Conversion to Educational Foundations.—An educational institution may convert itself into a non-stock, non-profit educational foundation, in accordance with the implementing rules to be issued jointly by the Ministry of Education, Culture and Sports and the Ministry of Finance.
In the case of stock corporations, if for any reason its corporate existence as an educational institution ceases and is not renewed, all its net assets after liquidation of the liabilities and other obligations may be conveyed and transferred to any non-profit educational institution or successor non-profit educational institution or to be distributed by a court to another organization to be used in such manner as in the judgment of said court will best accomplish the general purposes for which the dissolved organization was organized, or to the State.
D. Assistance to Students
Government Assistance to Students.
SEC. 51. Government Assistance to Students.—The government shall provide financial assistance to financially disadvantaged and deserving students. Such assistance may be in the form of State scholarships, grants-in-aid, assistance from the Educational Loan Fund, or subsidized tuition rates in State colleges and universities.
All the above and similar assistance programs shall provide for reserve quotas for financially needed but academically qualified students from the national cultural communities.
Grant of Scholarship Pursuant to Existing Laws.
SEC. 52. Grant of Scholarship Pursuant to Existing Laws.—Educational institutions shall be encouraged to grant scholarships to students pursuant to the provisions of existing laws and such scholarship measures as may hereafter be provided for by law.
Assistance from the Private Sector.
SEC. 53. Assistance from the Private Sector.—The private sector, especially educational institutions, business and industry, shall be encouraged to grant financial assistance to students, especially those undertaking research in the fields of science and technology or in such projects as may be necessary within the context of national development.
IV. THE MINISTRY OF EDUCATION, CULTURE AND SPORTS
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
