REPUBLIC ACT NO. 6055 - AN ACT TO
PROVIDE FOR THE CONVERSION OF EDUCATIONAL INSTITUTIONS FROM STOCK
CORPORATIONS TO NON-PROFIT FOUNDATIONS, DIRECTING THE GOVERNMENT
SERVICE INSURANCE SYSTEM, THE SOCIAL SECURITY SYSTEM AND THE
DEVELOPMENT BANK OF THE PHILIPPINES TO ASSIST IN SUCH CONVERSION, AND
FOR OTHER PURPOSES
Section 1. Any educational institution, organized as a stock
corporation, which for at least ten years has been conferring
baccalaureate degrees and has maintained its good standing as required
by Section two, paragraph (b) of this Act, may convert itself into a
non-stock non-profit education foundation, under the following
conditions:
(a) That the stockholders of the corporation, by
two-thirds vote in a stockholders' meeting called for the purpose,
agree upon a resolution to convey their shares to the corporation,
which is hereby authorized to acquire said shares, at a price fixed by
them: provided, that a stockholder who did not vote in favor of the
resolution shall enjoy and may exercise the right provided in Section twenty-eight and one half of Act No. 1459, as amended; otherwise, he
shall be deemed to have consented to be bound by the resolution;
(b) That the stockholders in said meeting elect the
board of trustees for the foundation which shall be organized upon the
conveyance of the shares of the stockholders to the corporation;
(c) That a copy of the resolution of the stockholders
containing the above matters, certified by the governing board, shall
be filled with the Securities and Exchange Commission; and
(d) That the articles of incorporation and the
by-laws of the corporation shall be amended to conform to the status of
the educational institution as a foundation: provided, that such
amendments shall become effective upon the conveyance of all the shares
of the stockholders to the corporation, which shall thereafter be known
as a foundation: provided, further, that the fact of such
conveyance and conversion shall be certified to by the board of
trustees of the foundation and the certificate shall be filed with the
Securities and Exchange Commission: and provided, finally, that the
shares conveyed to the corporation cannot be re-issued.
Sec. 2. The Government Service Insurance System
and the Social Security System are authorized and directed to grant
loans to educational stock corporations desiring to convert themselves
into foundations and the Development Bank of the Philippines is
authorized and directed to guarantee loans which such corporations may
obtain from other sources, domestic or foreign, provided:
(a) That paragraphs (a), (b) and (c) of Section One
have been complied with and the amendments of the articles of
incorporation and by-laws provided in paragraph (d) of the same section
have been made;
(b) That the educational institution is of good
standing, from the standpoint of academic standards, plant and
equipment, faculty, performance of graduates and other aspects related
to its capability to give a high quality of education, as certified by
the Secretary of Education.
(c) That the proceeds of the loan shall be used
exclusively to pay for the shares of stockholders conveyed to the
corporation;
(d) That the assets of the corporation shall be
transferred to the foundation, and may be given as collateral for the
loan; and
(e) That the foundation shall assume the liabilities
of the corporation.
Sec. 3. The loan to be given or guaranteed shall
be of long duration, from ten to thirty years, and properly secured by
the property of the school in accordance with the credit policy of the
financing institution and shall earn interest at the rate of three per
centum, per annum, subject to yearly amortizations, principal, and
interest, until such loan shall have been paid in full.
Sec. 4. The management of the Foundation shall be
vested in a board of trustees to be known as the "Board of Trustees of
the Foundation." The Board of Trustees shall be composed of ten
elective members, with a term of five years and the head of the highest
student organization as ex-officio member: provided, that the first ten
elected members of the board shall hold office in a staggered manner,
two expiring every year, beginning with the elected members having
received the lowest number of votes and successively in the order of
the ascending number of votes received. This Board shall elect all
subsequent members of the Board for a full term, except to fill a
vacancy for the unexpired term.
The elective membership of the Board shall be composed of businessmen,
financiers, and well-known educators. A representative of the
government financial institution granting or guaranteeing the loan
shall sit with the board as an ex-officio member until the loan is
fully paid.
Except for the officers, employees and the academic staff of the
Foundation, the Board of Trustees shall serve without compensation
other than reasonable per diems for actual attendance upon meetings of
the Board and actual and necessary expenses incurred upon other
official business authorized by resolution of the Board: provided, that
unwarranted and excessive salaries, allowances or expenses authorized
by the Board shall be ground for forfeiture of the privilege provided
in Section eight hereof.
Sec. 5. The Board of Trustees of the Foundation
shall have the following powers and duties in addition to its general
powers of administration:
(a) To keep the standard of instruction of the
Foundation at the highest level possible compatible with its finances;
(b) To issue rules and regulations for the conduct of
the business of the Foundation, with particular attention to the
improvement of the standard of instruction;
(c) To receive and appropriate to the ends specified
in this section such sums as the Government may endow; to receive in
trust, legacies, gifts and donations of real and personal property of
all kinds and to administer the same for the benefit of the Foundation
in accordance with the direction or instructions of the donor, and, in
default thereof, in such manner as the Board may, in its discretion,
determine;
(d) To appoint, on the recommendation of the
President of the Foundation, professors, instructors, lecturers and
other employees of the Foundation and fix their compensation, hours of
service, and such other duties and conditions as it may promulgate any
other provisions of law to the contrary notwithstanding, and to remove
them for cause after investigation and hearing shall have been had;
(e) To prescribe the courses of study and rules of
discipline and shall fix the requirements for admission to any college;
as well as for graduation and the receiving of a degree;
(f) To fix tuition fees required of students, as well
as matriculation fees, graduation fees, fees for laboratory courses,
and all other fees, the amounts of which may be regulated by the
Secretary of the Department of Education; and
(g) To prescribe rules for its own government, and to
enact for the government of the Foundation such ordinance and
regulations, not contrary to law, as are consistent with the purposes
and objectives of the Foundation as defined in subsection (a) of this
section.
Sec. 6. The Foundation shall exist in perpetuity
and shall continue to be a private institution and not a state
institution, the full repayment of the loan notwithstanding.
Sec. 7. If the Foundation is dissolved or for any
reason its corporate existence ceases, all its assets shall escheat to
the State, subject to its liabilities to third persons.
Sec. 8. The Foundation shall be exempt from the
payment of all taxes, import duties, assessments, and other charges
imposed by the Government on all income derived from or property, real
or personal, used exclusively for the educational activities of the
Foundation.
Sec. 9. Any income realized from conversion of the
stockholders' equity or interest in the school, college or university,
shall be exempt from income tax, the provisions of the National
Internal Revenue Code, as amended, to the contrary notwithstanding.
SECTION 10. All Acts, administrative rules and
regulations, and Executive orders, or parts thereof, inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.
SECTION 11. This Act shall take effect upon its
approval.
Approved: August 4, 1969
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