QuestionsQuestions (Republic Act No. 6055)
It must have been conferring baccalaureate degrees for at least ten years and must be in good standing as required by Section 2(b) (academic standards, plant/equipment, faculty, performance of graduates, and capability to give high quality education, certified by the Secretary of Education).
Stockholders must agree by two-thirds vote in a meeting called for the purpose. A stockholder who did not vote in favor may exercise the right under Section 28 and one-half of Act No. 1459, as amended; otherwise, he is deemed to have consented and is bound by the resolution.
The stockholders must: (1) approve conveyance of shares by two-thirds vote; (2) elect the board of trustees for the foundation organized upon conveyance; (3) file a certified copy of the resolution with the SEC; and (4) amend the articles of incorporation and by-laws to conform to the status of a foundation, effective upon conveyance of all shares, with certification by the foundation’s board and filing with the SEC.
The shares conveyed to the corporation cannot be re-issued.
The Government Service Insurance System (GSIS) and the Social Security System (SSS) are authorized and directed to grant loans; the Development Bank of the Philippines (DBP) is authorized and directed to guarantee loans obtained from other sources, domestic or foreign.
Compliance with Section 1(a)-(c) and amendments to articles/by-laws under Section 1(d); good standing from the standpoint of academic standards (certified by the Secretary of Education); proceeds used exclusively to pay for the shares conveyed; assets transferred to the foundation and may be collateral; and the foundation assumes the liabilities of the corporation.
Loan duration: from ten to thirty years. Interest rate: 3% per annum, with yearly amortizations of principal and interest until fully paid.
The proceeds of the loan must be used exclusively to pay for the shares of stockholders conveyed to the corporation.
Management is vested in a Board of Trustees (Board of Trustees of the Foundation) composed of ten elective members with a term of five years, plus the head of the highest student organization as an ex-officio member.
The first ten elected members hold office in staggered manner: two expire every year, starting with those who received the lowest number of votes, then successively in ascending order of votes received.
The elective members must be composed of businessmen, financiers, and well-known educators. A representative of the government financial institution granting or guaranteeing the loan sits as an ex-officio member until the loan is fully paid.
Except for officers, employees, and academic staff of the Foundation, trustees serve without compensation other than reasonable per diems for actual attendance and actual/necessary expenses incurred on other official business authorized by Board resolution; unwarranted and excessive salaries/allowances/expenses are ground for forfeiture of the privilege in Section 8.
It keeps standards of instruction at the highest possible level compatible with finances; issues rules to improve instruction; prescribes courses of study, admission and graduation requirements; and fixes tuition and related fees (laboratory, graduation, etc.), with amounts regulated by the Secretary of Education.
The foundation is exempt from payment of all taxes, import duties, assessments, and other charges imposed by the Government on income derived from or property used exclusively for educational activities. Additionally, income realized from conversion of stockholders’ equity or interest is exempt from income tax, notwithstanding the National Internal Revenue Code.
It exists in perpetuity and continues to be a private institution, and this continues notwithstanding full repayment of the loan.
All assets escheat to the State, subject to liabilities to third persons.
All Acts, administrative rules and regulations, and executive orders (or parts thereof) inconsistent with the provisions of RA 6055 are repealed or modified accordingly.