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WHEREAS, private schools, colleges and universities have been faced with increasingly serious problems arising from decreasing incomes due to slump in enrolment and increasing operational costs brought about by the rise in prices of instructional materials and educational, as well as allied services;

WHEREAS, it is imperative that private educational institutions upgrade classroom instruction by improving their facilities and hiring competent teachers in all levels of education, provide salary and/or wage increases and other benefits to their teaching, administrative and other personnel to keep up with the increasing cost of living;

WHEREAS, the procedure prescribed under R.A. No. 6139 for the increase of tuition and other school fees has been proved to be too cumbersome and time-consuming, and is not conducive to the growth and improvement of private educational institutions and the well-being of their employees, particularly those in the lower income groups; and

WHEREAS, in order to alleviate the sad plight of private schools, their personnel and all those directly and indirecty dependent on school incomes it is advisable and necessary that the cumbersome and time-consuming procedures fixed under. Republic Act No. 6139 for increasing tuition fees be simplified without opening the floodgates to abuse of the right to increase tuition and other school fees.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution do hereby decree and order the following as part of the law of the land:

SECTION 1. Authority of the Secretary of Education and Culture.—Within the limits and under the circumstances set forth in this Decree, the Secretary of Education and Culture shall have the authority to regulate the imposition of tuition and other school fees or charges by any and all private schools as denned under Act Numbered Two Thousand Seven Hundred and Six, as amended. No changes in the rates of tuition or other school fees or charges shall be effective without the prior approval of the Secretary of Education and Culture. New school fees or charges to be imposed by new or existing schools, whether for new courses or other matters, shall be at such reasonable rates as may be determined by the Secretary of Education and Culture based on the standard of such school.

SEC. 2. Application and Document Required.—Any private school which desires to revise its rates of tuition or other school fees or charges or to impose other fees or charges shall file application therefor with the Secretary of Education and Culture. The application shall include:

1. Statement of the itemized current rates of tuition and other charges and the corresponding itemized proposed changes thereon, as well as the new fees or charges proposed to be imposed, and of the proposed allocation of the incremental proceeds in accordance with Section 3 (a) hereof. Such statements shall, when accomplished be under oath by the proper official(s) of the school concerned;
2. Financial statement showing the financial status of school duly certified by a certified public accountant;
3. A copy of the last tax return, where required, filed with the Bureau of Internal Revenue.

SEC. 3. Limitations.—The increase in tuition or other school fees or other charges as well as the new fees or charges authorized under the next preceding section shall be subject to the following conditions:

1. That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school concerned, and the balance for institutional development, student assistance and extension services, and return to investments: Provided, That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds; and
2. That any such increase shall in no case exceed fifteen (15%) per centum of the rates charged during the next preceding school year.

SEC. 4. Rules and Regulations.—The Secretary of Education and Culture is hereby authorized, empowered and directed to issue the requisite rules and regulations for the effective implementation of this Decree. He may, in addition to the requirements and limitations provided for under Sections 2 and 3 hereof, impose other requirements and limitations as he may deem proper and reasonable.

SEC. 5. Prohibitions.—No school administration or office or division thereof shall hold or sponsor any benefit performance, movies, concerts, dramatic presentation, games and/or shows of whatever kind or nature whether for charity or otherwise. Any such act on the part of the school administration or office or division thereof shall be considered a circumvention of this law and shall be sufficient cause for the cancellation of the approval of any previous increase in tuition or other school fees and shall subject the school official concerned to such disciplinary action as the Secretary of Education and Culture may deem proper including the revocation on any degree conferred by authority of the Government.

SEC. 6. Review of Financial Statements.—Financial statements submitted in accordance with the provisions of Section 2 hereof may be reviewed by the Commission on Audit at the instance of the Secretary of Education and Culture whenever he believes that the same is necessary for verification purposes. For this purpose, the Commission on Audit is authorized to examine the pertinent books and records of the school concerned.

SEC. 7. Additional Scholarships.—As a further condition to any grant of increase in tuition or other school fees, private schools with a total enrolment of at least one thousand, are hereby required to private free scholarships to poor but deserving students at the ratio of one (1) free scholarship for every five hundred (500) pupils/students enrolled: Provided, That this requirement shall be exclusive of the present practice of private schools offering scholarship privileges to valedictorians and salutatorians and other pupils/students who have achieved scholastic distinctions. Neither shall other forms of scholarships such as those offered to athletes and working students be included in arriving at the proper number of poor but deserving pupils/ students to be given free scholarships.

SEC. 8. Penal Clause.—Any violation of the provisions of this Decree or of the rules or regulations promulgated pursuant thereto or any final decision made by the Secretary of Education and Culture shall be punishable by a fine of five thousand (P5,000.00) pesos or imprisonment of two years or both at the discretion of the court which penalty shall be imposed on the official(s) of the private school or on any person acting for and in behalf of the school directly responsible for the violation. If the violator is a public official the same penalty shall be imposed without prejudice to any administrative action which may be taken against him.

SEC. 9. Repealing Clause.—Republic Act No. 6139 is hereby repealed, and all laws, decrees, executive orders, directives and rules and regulations inconsistent herewith are likewise repealed, amended or modified accordingly.

SEC. 10. Effectivity.—This Decree shall take effect immediately.

Done in the City of Manila, this 11th day of May, in the year of Our Lord, nineteen hundred and seventy-four.