THE ESTABLISHMENT, RECOGNITION AND ACCREDITATION OF SCHOOLS Public schools are established by the government. A state university or college is created by a specific law that is passed by the legislature. This law is its charter. On the other hand, the establishment of private schools in the Philippines is authorized by the Constitution, subject to certain limitations on ownership, as well as on control and administration. ESTABLISHMENT OF PRIVATE SCHOOLS ConsTITUTIONAL Basis Under Section 4(2) of Article XIV of the 1987 Philippine Constitution, it is provided that educational institutions must be owned solely by citizens of the Philippines, except for those established by religious groups and mission boards. In the case of corporations, foreign capitalization is allowed up to 40%. In private educational institutions, foreigners are prohibited from holding positions that allow them to exercise control and administration of these schools. An exception to this rule on citizenship requirement in both ownership and administration of schools is also provided by the Constitution. Although the Constitution Prohibits the establishment of schools exclusively for aliens, schools may be established in the Philippines Solely for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreigntemporary residents. The obvious reason for this is that the members of the foreign diplomatic community in our country are, under international law, not subject to our laws. Thus, the Constitutional requirement that no group of aliens shall constitute more than one-third of the enrollment in any school does not apply to these schools which are established exclusively for foreign diplomatic personnel and their dependents. Statutory Basis The establishment of a private school in the Philippines is specifically governed by the pertinent statutory provisions under Act No. 2706, which is the private school law; B.P. 232, as amended; RA 7798, which amended Section 25 of BP 232; B.P. Blg. 68, which is the Corporation Code; and by other pertinent laws. Act No. 2706 is “An Act Making the Inspection and Recognition of Private Schools and Colleges Obligatory For the Secretary of Public Instruction and For Other Purposes.” Pursuant to this law, the Manual of Regulations For Private Schools was formulated. av StaTuTORY REQUIREMENTS Under Section 3 of Act No. 2706, any person or group of persons who want to establish a private school must first secure the permission of the Secretary of Public Instruction (now Secretary of Education), and shall file at his office the corresponding petition which shall set forth the following: ree _—— 2 1. The name and location of the college or school. 2. The names and addresses of all officers, directors, governing boards and faculties. 3. The date of the organization.4. The total amount of money actually invested, and. other information relative to the financial condition of the school or college. 5. A description of the buildings occupied or to be occupied by the college or school, with full de- tails regarding the number and dimensions of the rooms, plumbing and sanitary arrangements, and facilities for proper lighting and ventilation. 6. A list of teachers and assistants, showing their academic degrees, profession, experience, and qualifications, and the subjects to be taught by each. 7. Complete information concerning the curriculum to be established, with full details regarding the amount of instruction to be given on each subject. 8. Full information relative to laboratories, equipment, and libraries. 9. All other details and data which the Secretary of Public Instruction may request for the purpose of passing the application. If the Secretary of Education is satisfied after evalu- ating this application to open a private school or college, and considers the opening of such school or college warranted by public interest, he may grant the applicant a temporary permit. The necessary authority to open such school or college Shall be granted by the Secretary of Education, subject to his revocation at anytime when it is found that such School or college is mismanaged or does not carry out its curriculum, or when the standards of instruction provided for are not maintained by the members of its faculty orwhen the same are incompetent in their work, or when fraud was committed in making the application (Sec, 4 Act No. 2706, as amended). As amended by Act No. 3075, under Sec. 1 thereof, the following has been addeq a Sec. 4 of Act No. 2706: It shall be the duty of the Secretary of Public Instruction from time to time to inspect, either himself or through his duly authorized agent, all schools or colleges to which he has granted permits to open, and to see to it that the same are properly maintained and kept to the stan- dards hereinafter provided in this Act. A new section was added to Act No. 2706 by Act No. 3075, under Section 2 thereof, which amended the said Act No. 2706. This new section states the following: Sec. 12. Any person or group of persons who shall open, direct, maintain, or manage a private school or college as defined by this Act, and shall advertise, publish, or otherwise announce, verbally or by means of signs, cards, letter- heads, or advertisements or through any other form of publicity, that such person or group of persons has applied for authority to open a private school or college, or for the recognition of, such school or college, when he has not actually2so applied, or that such private school sor college has been duly authorized, when in reality it has not been so authorized, or such authority has been cancelled; or that it is recognized, when in reality it has not been recognized or such recognition has been with- drawn, shall upon conviction, be punished by 4 fine not exceeding five hundred pesos, or by imprisonment not exceeding six months, or both, in the discretion of the court; Provided, That inthe case of corporations or partnership, the president, secretary, or director, administrator, or manager shall be held responsible for the violation. In addition to getting a permit to operate under Act No. 2706, as amended, Section 25 of the Education Act of 1982 (BP 232) requires that any private school proposed to be established must incorporate in accordance with the provisions of the Corporation Code of the Philippines, which is Batas Pambansa Blg. 68 (or BP 68). But it must incorporate only as a non-stock or non-profit educational corporation. Obviously, the purpose is to stop making the operation of private schools as a business proposition. Under Section 107 of the Corporation Code of the Philippines (B.P. Blg. 68), the Securities and Exchange Commission (SEC) cannot accept or approve the registration of the Articles of Incorporation and by-laws of any educa- tional institution without the favorable recommendation of the Department of Education. It is this act of registration that gives an educational institution a personality that is separate and distinct from its incorporators or stock- holders. Section 108 of B.P. Blg. 68 provides that trustees of non-stock educational corporations shall not be less than five (5) nor more than fifteen (15), and that the number of trustees shall be in multiples of five (5). The said Section 25 of BP 232 also provides that this requirement to incorporate may be waived in the case of family-administered pre-school institutions. This requirement for an educational institution to incorporate is also provided for under Act No. 2706. To reiterate, it is this act of incorporation that gives an educational institution a personality that is separate anddistinct from that of its incorporators or stockholders, and this comes upon the issuance of its Certificate of Incor- poration by the Securities and Exchange Commission, Section 25 of B.P. Blg. 232, however, has been amended by RA 7798, which was approved on August 25, 1994. Under this amendment, private schools may now be incorporated as a stock educational corporation provided that certain capitalization requirements are complied with. Under RA 7798, the minimum paid-up capital for stock educational institutions which are engaged in el- ementary education should not be less than One Million Pesos (P1,000,000.00); not less than Two Million Five Hundred Thousand Pesos (P2,500,000.00) for those offering both elementary and secondary education; and not less than Five Million Pesos (P5,000,000.00) for those offering elementary, secondary, and tertiary and postgraduate courses, with the exception of existing educational insti- tutions organized as stock corporations and allowed to retain their original capitalization. These existing stock educational corporations may automatically apply for the renewal of their corporate existence when the original period is about to expire. For purposes of incorporation of stock corporations, Section 13 of the Corporation Code of the Philippines (B.P. Blg. 68) requires that at least twenty five per cent (25%) of the authorized capital as stated in the articles of incorporation must be subscribed at the time of the incorporation. Of the total shares of stock subscribed, at \least twenty five percent (25%) must be paid upon sub- ‘scription. In no case shall the paid-up capital be less than five thousand pesos (P5,000.00). The balance of the unpaid subscription is payable on the date or dates fixed r whet the contract of subscription without need of call or, in the absence of a fixed date or dates, upon by the board of directors. iIt may be noted that while RA 7798 requires a minimum paid-up capitalization of not less than one million pesos (P1,000,000.00) for stock educational corpora- tions engaged in elementary education, the Corporation Code (B.P. Blg. 68) allows the incorporation of other corporations with a minimum paid-up capital of only five thousand pesos (P5,000.00). In addition to capitalization requirements, RA 7798 provides that stock educational institutions may be al- lowed only in capital-intensive courses of study. The determination as to whether or not a course of study is capital-intensive is lodged in the Department of Educa- tion, the Commission on Higher Education, and the De- partment of Science and Technology, as the case may be. Founpation ScHooLs An educational institution may be established as a foundation schocl at the outset, that is, as a private and non-stock educational institution. In such cases, the procedure for establishing a non-stock educational cor- poration is to be followed. An educational institution that has been organized as a stock corporation may be converted into a foundation school pursuant to RA No. 6055.