Creation of Special Education Fund by RA 5447

What the Fund is financed from

Section 2 provides that the Fund consists of proceeds from:
- a portion of the taxes on Virginia-type cigarettes and the duties on imported leaf tobacco; and
- an additional tax on real property.
Section 3 directs the disposition of the entire collection from:
- specific taxes on locally-manufactured Virginia-type cigarettes; and
- tariff duties on imported leaf tobacco.
Section 3 first sets the local-government share under Commonwealth Act No. 586, as amended, to be computed and set aside for distribution to local governments under existing laws.
Section 3 requires 1% of the entire collection to be retained by the Bureau of Internal Revenue for purchase of strip stamps, apparatus, equipment, and for improvement and adoption of modern methods for enforcement and collection.

How cigarette/leaf tobacco collections are shared

Section 3 allocates the remaining “balance” of the entire collection as follows:
- 10% to the national share of the Fund;
- 40% to the Philippine Virginia Tobacco Administration Tobacco Fund created under Republic Act No. 4115; and
- 50% to the general fund of the National Government.
Section 3 preserves the prior computation and distribution system for local governments via the regular internal revenue allotment mechanism under Commonwealth Act No. 586, as amended.

Additional real property tax mechanics

Section 4 imposes an annual additional tax of 1% on the assessed value of real property in addition to the regular real property tax.
Section 4 exempts real property assessed to any one person if the entire total assessed valuation is not in excess of PHP 3,000, in which case the additional tax shall not be collected.
Section 4 caps the total real property tax at a maximum of 3%.
Section 4 requires payment despite Article 3 of Commonwealth Act No. 470 and contrary charter provisions:
- the basic and additional real property tax are due in four equal installment;
- the first is due on or before March 35;
- the second is due on or before June 30;
- the third is due on or before September 30; and
- the last is due on or before December 31.
Section 4 uses the existing assessment basis under Commonwealth Act No. 470 and other applicable laws for collecting the additional levy under this Act.
Section 4 requires collection by the municipal or city treasurer where the real property is situated.

Real property tax revenue distribution

Section 4 directs distribution of collected additional tax as follows:
- Municipalities:
  - 50% retained by the municipality;
  - 20% remitted to the provincial treasurer of the province; and
  - 30% remitted to the Treasurer of the Philippines to be expended exclusively to stabilize the Special Education Fund in municipalities, cities and provinces under Section 7.
- Cities:
  - 60% retained by the city; and
  - 40% remitted to the Treasurer of the Philippines to be expended exclusively to stabilize the Special Education Fund under Section 7.
Section 4 requires that the stabilization expenditure of the Treasurer of the Philippines proceeds follow Section 7.

Local school boards: creation and composition

Section 5 requires establishment of a local school board in every province, city, or municipality:
- Provincial School Board,
- City School Board, and
- Municipal School Board.
Section 5 provides the composition for each board:
- Provincial School Board:
  - Division Superintendent of Schools (Chairman)
  - Representative of the Provincial Governor
  - Provincial Treasurer
  - Representative of the Provincial Board chosen by the Board
  - President or duly-elected representative of the League of Parents-Teachers Associations
- City School Board:
  - City Superintendent of Schools (Chairman)
  - Representative of the City Mayor
  - City Treasurer
  - Representative of the City Council chosen by the Council
  - President or duly-elected representative of the League of Parents-Teachers Associations
- Municipal School Board:
  - District Supervisor (Chairman)
  - Representative of the Municipal Mayor
  - Municipal Treasurer
  - Representative of the Municipal Council chosen by the Council
  - President or duly-elected representative of the League of Parents-Teachers Associations
Section 5 prohibits delegation of the duties and responsibilities of the named persons once appointed or nominated.

School board functions and governance

Section 6 tasks provincial, city, and municipal school boards to:
- determine annual budgetary needs and cost to meet them, using criteria set by the Bureau of Public Schools or Bureau of Vocational Education (as applicable) and approved by the Secretary of Education, and prepare an annual school budget corresponding to their shares of proceeds from the additional real property tax;
- apply to the Bureau of Public Schools or Bureau of Vocational Education (through the Division Superintendent or Superintendent of Vocational Education) for a share in the Fund under Section 4A (3) and 4B (2), with remittance to the concerned provincial, city, or municipal treasurer upon approval;
- authorize the appropriate treasurer to disburse funds from their share in the Special Education Fund pursuant to the budget and in accordance with rules and regulations under Section 10; and
- perform other functions and duties assigned by the Bureau of Public Schools or Bureau of Vocational Education.
Section 6 provides that chairmen and members perform without compensation or remuneration.
Section 6 allows members who are not government officials to receive necessary travelling expenses chargeable against their corresponding funds.
Section 6 requires:
- meetings at least once a month or as often as the chairman or majority convenes;
- a quorum of three; and
- the chairman to be present when the special school budget is being prepared;
- approval of the budget requires the affirmative vote of three.

Budgeting, priorities, and expenditures

Section 7 requires each school board to prepare, not later than August 15 each year, a budget of receipts and expenditures for the ensuing fiscal year to carry out this Act’s purposes.
Section 7 states that budgets prepared and approved in accordance with Republic Act No. 5168 and other existing laws and rules become final and executory upon approval by the boards, unless an appeal is taken within 15 days from the approval date.
Section 7 provides that appeals are to be filed with the Director of Public Schools or the Director of the Bureau of Vocational Education (as applicable), and the Director must decide within 30 days from receipt of the appeal under rules and regulations to be promulgated by the Secretary of Education.
Section 7 requires that any school need not covered by the board’s budget be forwarded to the Department of Education through the appropriate bureau, together with the approved special budget for the ensuing fiscal year, for information.
Section 7 governs national-government expenditures from the Fund by requiring that they be made pursuant to appropriations made by law and included in the annual General Appropriations Acts budgets of the bureaus.
Section 7 mandates that the Department of Education allocate the national-government portion using a priority schedule starting with the lowest-classification municipalities, cities, or provinces under Section 2171 of the Revised Administrative Code, as amended by Section 1 of Republic Act No. 2368.
Section 7 preserves eligibility for priority local governments starting with the fourth year from Act approval, requiring their total collection from real estate taxes during the preceding three fiscal years to have increased by an average of at least 15%.
Section 7 appropriates collections accruing to the Fund during the fiscal year ending June 30, 1969 to fund General and Bond Fund appropriations of the bureaus that cannot be programmed for lack of funds, with a strict priority schedule of amounts:
- PHP 20,000,000, or so much thereof as may be necessary, for adjustment and payment of salaries of public school teachers under Republic Act No. 5168;
- PHP 5,000,000, or so much as may be necessary, for repair of school buildings and building accessories;
- PHP 5,000,000, or so much as may be necessary, as aid to barrio high schools;
- PHP 2,000,000, or so much as may be necessary, for government scholarships for poor but deserving students under Republic Act No. 4090;
- PHP 4,000,000, or so much as may be necessary, for acquisition and establishment of an adequate printing plant used exclusively for printing textbooks, teaching materials, and other printing needs of the Department of Education, with operation and maintenance undertaken by the Bureau of Printing;
- PHP 1,000,000, or so much as may be necessary, for expenses connected with the holding of the Bureau of Public Schools 1969 Interscholastic Meet; and
- PHP 500,000, or so much as may be necessary, for education research, including that of the Board of National Education.

Tax administration application and transfers

Section 8 makes applicable to the additional real property tax the administrative, special, and general provisions of law on the assessment, remission, collection, and refund of real property taxes not inconsistent with this Act.
Section 9 requires municipal or city treasurers to:
- retain the shares of municipal or city government; and
- turn over the portions of collections of the taxes and penalties in Section 4 pertaining to the province and/or the National Government to their respective treasurers.
Section 9 imposes a monthly remittance schedule:
- remittance must be made monthly within 15 days of every succeeding month.
Section 9 forbids diverting or transferring any portion of collections to the general or any other fund of the National Government, provinces, cities, or municipalities, and forbids using or expending them for purposes other than those specified in this Act.
Section 9 makes it the ministerial duty of:
- the Budget Commissioner,
- the Treasurer of the Philippines,
- municipal, provincial, and city treasurers, and
- the officials and employees under their supervision and control,
  to effect releases from the Fund within 15 days from receipt of the order and/or authorization by the Secretary of Education (national-government share) and by the appropriate school boards (respective shares).

Rules, enforcement, and publication

Section 10 requires the Secretary of Education and the Secretary of Finance—upon recommendation of:
- the Director of Public Schools,
- the Director of Vocational Education, and
- the Treasurer of the Philippines (as the case may be),
  to promulgate all rules and regulations for effective enforcement of this Act within their respective jurisdictions.
Section 10 mandates publication of the rules and regulations within 15 days from promulgation in three newspapers of general circulation in the Philippines.
Section 10 provides that the rules take effect 15 days after publication.

Criminal penalties and dismissal

Section 11 punishes any person who fails or refuses to turn over the collections of taxes and penalties under this Act within the period fixed in Section 9, or who delays, obstructs, or prevents such turnover.
Section 11 punishes any person who fails or refuses to effect Fund releases within the period fixed in Section 9, or who delays, obstructs, or prevents such releases.
Section 11 punishes any person who orders, causes, or effects the transfer or diversion of collections of the Fund or any portion thereof.
Section 11 provides the penalty for these offenses as:
- a fine not exceeding PHP 10,000, or
- imprisonment not exceeding 6 years, or
- both, in the discretion of the court.
Section 11 provides that if the offender is a government official or employee, the offender must be dismissed from the service with prejudice to reinstatement and disqualified for election or appointment to any public office.

Separability, repeals, and effectivity

Section 12 provides for separability: invalidity of any part, section, or provision does not affect the validity of the remaining parts.
Section 13 repeals, amends, or modifies all Acts, parts of Acts, executive orders, ordinances, rules, and regulations inconsistent with this Act.
Section 14 provides effectivity:
- this Act takes effect on January 1, 1969,
- except the allocation under Section 3, which takes effect upon approval of the Act.