Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS.
First Regular Session

House'Bill No._ 4565

Introduced by Representatives Ron P. Salo and Ann K. Hofer

EXPLANATORY NOTE

In the age of globalization, there is a need to adapt to continually evolving
international trends and standards. The methods and institutions that are the giants
of the industries will eventually falter if they will not be able to keep up with the ever
changing demands of the world. The developed countries are showing the way to a
strong and stable economy and the Philippines can very much learn from their best
practices. What better way to learn the best practices of developed countries than by
exposing ourselves to the methods and techniques of their educational system and
learn from their classrooms from a first-hand perspective.

The quality of education differs from country to country. It depends on their
methods, facilities, available resources, and also on their norms, culture and
tradition. In the advent of globalization, it is essential that the gaps and differences of
the quality of education be closed in order for those countries that are lagging behind
to keep up, or at least emulate, the trends of developed countries. Those countries
that fail to adapt and adopt the trends are doomed to suffer from slow economic
development,

One avenue for the Philippines to keep up with the trends in globalization is to
‘open our higher education institutions to partnerships with foreign higher education
institutions. In this way, we get to expose ourselves to the best practices of other
countries that we may adopt and integrate into our higher educational system. For
their part, they will be able to immerse themselves into our methods and practices
and expose our higher education institutions to their commendations and
suggestions.

By entering into partnerships and other collaborative arrangements with
reputable universities from around the globe through transnational education (TNE),
the Philippines will be able to attract a flow of talented faculty and international
students who pay fees and contribute to the economy, with potential benefits to its
research and development base. It will enable the country to develop greater
teaching and research capacity in niche and technical fields that are critical for
economic and social development.

Page 1 of 16


Collaborative provision of education through TNE will improve access to
higher education. Local students who are otherwise unable to travel abroad will have
access to the best foreign universities, thereby stemming the outflow of currency.
Examples from other countries in East Asia, such as Hong Kong and Malaysia, show
that good quality TNE provision can widen access to higher education, an important
national priority.

TNE has the potential to create more jobs inside the Philippines for teaching
professionals, academics and support staff. Added to the existing advantage that the
Philippines has in the English language, TNE can enhance the international
attractiveness of the Philippine higher education system, positioning domestic higher
education institutions more positively as preferred partners for international
collaboration and strengthening their capacity to carry out research that supports the
country's growing knowledge economy. In addition, the improvement of talent
retention will address some of the issues associated with the large-scale diaspora
overseas of skilled workers, many of whom are college graduates with high English
proficiency.

The offering of programs and establishment of transnational education
institutions is not new to us. In fact, there have been various issuances on this
matter. In 2008, pursuant to the UNESCO/Council of Europe Code of Good Practice
in the Provision of Transnational Education (adopted in 2001), the CHED issued
Memorandum Circular No. 2, adopting and promulgating the Policies, Standards,
and Guidelines for Transnational Education. Very recently, CHED conducted
consultations in Luzon (June 24, 2016), Visayas and Mindanao (June 15, 2016) on
the proposed guidelines for transnational education

However, as it stands, there is no law that provides the overall framework for
the operation and administration of transnational education in the Philippines. There
is a need to create a legislation that will institutionalize the mechanisms for
transnational education in the country.

This Bill seeks to provide the legal framework for the creation, operation,
administration, and coordination of transnational higher education in the Philippines.
It also provides measures to ensure that the barriers in the country's legislative and
regulatory framework will be addressed to facilitate the operation of TNE institutions
and the enrolment of foreign students in the country.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

ack caro ANN K. HOFER
KABAYAN Partylist 2nd District, Zamboanga Sibugay

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session
ane

House Bill No, 4565

Introduced by Representatives Ron P. Salo and Ann K. Hofer

AN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE
CREATION, OPERATION, AND ADMINISTRATION OF TRANSNATIONAL
HIGHER EDUCATION IN THE PHILIPPINES, PROVIDING FUNDS THEREFOR,
AND FOR OTHER PURPOSES:

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the “Transnational Higher
Education Act of 2016”.

SEC. 2. Declaration of Policy. ~ It is hereby declared the policy of the State to
provide quality education that is relevant to the changing needs of the people and
society. The State recognizes that rapid developments brought about by
globalization, including liberalization of trade in goods and services and expanding
use of information and communication technologies, have created a climate for
borderless teaching and learning. In this light, the State shall endeavor to modernize
the Philippine higher education sector, and bring international quality standards and
expertise into the country, with a view to making higher education globally
competitive; attracting a flow of talented students, faculty, and staff and improving
the country's human resource base.

The State shall actively encourage, promote, and accelerate the establishment of
transnational higher education institutions in the country, and shall take an active
part in developing the Transnational Higher Education sector. Further, it is declared
a policy of the State to: strengthen educational, cultural, social, economic, and
political bonds between Philippine and foreign institutions of higher learning, thereby
fostering a vibrant exchange of cultures integral to a peaceful living within the global
community; develop collaborative arrangements between and among Philippine
universities and training institutes, on one hand, and foreign universities, on the
other, with the aim of building the capacity of all partner institutions to operate,
manage, and administer post-secondary and graduate programs and to provide
opportunities for students and learners to acquire international and foreign diplomas,
degrees, and certificates.

Page 3 of 16


SEC. 3. Definition of Terms. — As used in this Act:

a) Academic Program refers to a set of courses of study the completion of
which areas leads to a degree;

b)

Auxiliary services refers to services that support the delivery of educational
services including promotion activities, recruitment of students, admission,
registration, processing of payments, student orientation, and such other
related activities, but not to include teaching and learning activities;

°)

Distance education refers to a mode of educational delivery whereby the
teacher and the learner are physically separated from each other, and
instruction is delivered through appropriate communication technologies and
using specially designed materials and methods, and supported by
organizational and administrative arrangements and structures;

dq)

Education services refers to any study program, course of study or parts of a
course of study that leads to a qualification, after successful completion;

e)

Foreign Higher Education Institutions (FHE!) refers to a foreign-owned and
duly recognized higher education institution abiding by a prescribed system of
education duly registered in a country other than the Philippines;

f) Higher Education refers to any of the various types of education given in
post-secondary institutions of learning and usually affords, at the end of a
course of study, a named degree, diploma, or certificate indicating
qualifications. For purposes of this Act, higher education includes technical
and vocational education and training (TVET) institutions such as teacher-
training schools, junior colleges, and institutes of technology:

g) Higher Education Institutions (HEIs) refers to post-secondary education
institutions which include universities and colleges, TVET institutions, and
specialized institutions that provide advanced degrees in such fields as law,
theology, medicine, business, music, and art, HEls may be public or private

entities;

h

Transnational Higher Education (TNHE) includes all types and modes of
delivery of higher education study programs, sets of courses of study, or
educational services, including distance education and study- abroad
programs, which involve education systems of a State different from the State
where a TNHE provider operates, or programs which may operate
independently of any national education system;

i) Transnational higher education arrangement refers to an educational,
legal, financial, or other arrangement agreed upon formally by partners in
order to provide educational services;

j) TNHE Zones or Hubs are specialized zones of academic centers, training

centers, or institutions of learning. “Hubs” may refer to smaller units. For
purposes of this Act, “Zones” and “Hubs” are interchangeable.

Page 4 of 16


SEC. 4. Strategy for Transnational Higher Education. — Consistent with the
provisions of this Act, the Commission on Higher Education (CHED) shall formulate
a coherent national strategy to encourage and facilitate the establishment of the
most effective types of transnational higher education (TNHE) programs and
institutions in the country

SEC. 5. General Framework for Establishment of TNHE Programs and
Institutions. — The establishment, ownership and administration of transnational
higher education institutions shall be promoted, encouraged, and facilitated, subject
to the following principles pursuant to Section 4(2), Article XIV of the 1987
Constitution:

a) All educational institutions shall be owned solely by citizens of the Philippines
or corporations or associations at least sixty per centum of the capital of which
is owned by such citizens; except in the instances provided in the succeeding
sub-paragraph (b);

b)

The above sub-paragraph does not apply to educational institutions
established by religious groups and mission boards;

°)

No educational institution shall be established exclusively for aliens and no
group of aliens shall comprise more than one-third of the enrolment in any
school, except in the instances provided in sub-paragraph (e);

i)

The control and administration of educational institutions shall be vested in
citizens of the Philippines. Provided, that this control and administration
requirement is deemed met once positions on the level of “President,” “Dean,”
“Principal,” “Chancellor,” or other functionally equivalent positions, and an
absolute majority of the membership of the governing body or board, are held
by citizens of the Philippines. Every decision of the governing board shall
require the vote of a majority of the Filipino members;

e)

The provisions of sub-paragraphs (a), (c), and (d) of this Section do not apply
to schools established for foreign diplomatic personnel and their dependents,
and for other foreign temporary residents. For purposes of this Act, “other
foreign temporary residents” shall include those stationed in the Philippines
for a specific period under public or private contract, or foreign students who
are in the Philippines specifically to pursue higher education. The TNHE is
deemed established specifically for foreign diplomatic personnel and their
dependents, or other foreign temporary residents when the student population
is at least fifty (50%) foreigners, while its faculty members are at least twenty-
five percent (25%) foreigners.

SEC. 6. Modes of Transnational Higher Education Programs. — TNHE programs
and arrangements that are existing, emerging, or anticipated include, but not limited
to, the following:

a) Academic Franchising, whereby a higher education institution (franchiser)
from a certain country grants another institution (franchisee) in another

Page 5 of 16


b)

©)

d

e)

i}

country the right to provide the franchiser’s programmes/qualifications in the
franchisee's host country, regardless of the students’ origin;

The local franchisee must be registered with the Securities and Exchange
Commission (SEC) and authorized to deliver educational programs or
materials;

Articulation, whereby students studying for a sub-degree in one country are
guaranteed advanced entry into a degree programme in another country if
they achieve an agreed level of performance in their studies;

Branch campus, which refers to a campus of a higher education institution
(HE!) from one country established in another country (host country) to offer
its own educational programs/qualification, regardless of the students’ origin;

International branch campuses, whereby HEls located in another country from
the institution which either originated it or operates it, with some physical
presence in the country, and which awards at least one degree in the host
country that is accredited in the country of the originating institution, typically
have local partner HEIs, as specified in section 9 of this Act.

Joint and double degrees — Joint degrees refer to a partnership provision
which leads to a single degree awarded by two or more institutions. The
program is jointly developed, jointly delivered, and jointly assessed. Double
degrees refer to a partnership provision which leads to two degrees awarded
by two institutions; fi

Online, blended, and distance learning, which refer to a program delivered
across an international border. The delivery medium is usually online, but
distance education may be delivered by post or mobile phone. Provision
which is partly online and face-to-face is blended;

TNE Offshore institution, which is an autonomous institution established in a
host country, which in terms of its organization and education contents,
belong to the education system of another country;

Twinning arrangements, where students study for a degree in two countries,
starting in their own and finishing in another, which typically is the country of a
partner institutions;

h) Validation, where a HEI agrees to award its own degree to students who

complete a program from a HEI in another country.

Any other modes or arrangements may be explored or proposed to CHED by HEIs
intending to enter into partnerships or arrangements with other HEIs. The CHED, in
consultation with other agencies and HEIs, may add other modes of TNHE as it may
deem suitable and in furtherance of the objectives of providing quality TNHE
programs in the country, provided that these modes or arrangements are consistent

Page 6 of 16


with the Philippine development plans, and are not in contravention of the
Constitution, laws and related policies.

SEC 7. Establishment of Foreign Higher Education Institutions in the
Philippines. - Foreign Higher Education Institutions (FHEIs) may establish a
commercial presence in the Philippines through any of the modes indicated in this
Act or through any other arrangement with a Philippine HEI that is consistent with the
Philippine Constitution, laws and policies, and based on mutually agreed terms.

The FHEls shall conform to the following minimum standards:

a) Only FHEls recognized by their respective governments as quality higher
education providers and accredited by a recognized accrediting body in the
country of origin or its equivalent may be given government authority to offer
undergraduate, graduate, and post-graduate degrees;

b) The FHE!s shall have standards at par with, or higher than, Philippine HEIs in
terms of government recognition, faculty strength and curriculum;

c) The FHEls shall have the requisite capabilities and resources for higher
education provision, and the ability to provide support services to students.

SEC 8. Partnerships and Collaborative Arrangements. — FHEls may enter into
collaborative arrangements with Philippine HEls, such as but not limited to, twinning
arrangements as defined under Section 3 of this Act; or joint degrees, whereby study
programs, or parts of a course or study, or other educational services of the
awarding institutions, are provided by another partner institution

The parties shall conform to the following minimum standards:

a) The FHE! shall seek prior authority from CHED to operate specific educational
and/or auxiliary services and shall comply with the requirements set forth in
this law and by CHED policies and regulations. No FHEP shall be allowed to
establish its branch or any entity purporting to deliver educational programs
without approval of the CHED;

=

Only Philippine HEIs which are CHED — recognized and duly accredited shall
be authorized to conduct and initiate collaborative or twinning programs with
FHEls. The CHED shall determine the level of accreditation which Philippine
HEIs are required to possess in order to be authorized to enter into
collaborative arrangements with FHEIs;

©)

Both partners shall draft a memorandum of agreement (MoA) in terms of the
programs, duration, evaluation and termination of the agreement, which MoA
shall be legally binding to both parties. The CHED shall be consulted in the
finalization of the MoA, which shall determine whether it complies with all the
national laws as well as the CHED’s policies. The CHED shall determine the
documentary requirements needed to be submitted by the parties. Provided,
that any document executed or issued outside the Philippines must first be

Page 7 of 16


ad

authenticated with the appropriate Philippine Foreign Service post before
submission to CHED;

d

The academic quality of the higher education programs involved are at least
comparable to the local programs based on established standards, or
otherwise compliant with established international standards. Procedures
concerning the quality of education services provided by TNHE arrangements
shall be based on specific criteria, which are transparent, systematic, and
open to scrutiny;

e)

The programs involved have achieved the required level of accreditation and
other quality assurance requirements;

f) The critical details of the collaborative arrangements are transparent to
government and to the public;

9

Public announcements about collaborative arrangement or about any TNHE
program shalll be authorized by government.

Philippine HEIs and all providers of educational and/or auxiliary services who are
partners of the FHEI must be registered with the SEC (in the case of corporation or
partnership) or with the Department of Trade and Industry (DTI) in the case of sole
proprietorship) for the purpose of providing educational and auxiliary services.
Likewise, existing entities seeking to expand their services to include TNE operations
must register expansion with SEC or DTI.

SEC. 9. Establishment of Local Branches. — FHEls may establish local branches
or satellite campuses in the Philippines through a local partner, at least 60% of which
is owned by Filipino citizens, duly registered with the SEC or the DTI, as the case
may be. The FHE! may maintain its name, offer the education programs through the
branch, and award the degree or credit. The local branch shall be managed and
administered jointly by the parties, subject to the provisions of the Constitution on
control and administration of educational institutions, as reiterated in Article 5 (d) of
this Act. The local partner shall be accountable for quality assurance of the programs
offered.

The FHEI! may also incorporate a Philippine company to operate its local campus,
provided that at least 60% of its voting stocks are reserved for Filipino citizens;
Provided further, that the FHEI shall first secure the approval of the SEC by filing its
incorporation papers, together with authenticated copies of its foreign charter and by-
laws; Provided, finally, that the FHEI shall be required to post a bond in an amount to
be determined by the SEC, to guarantee fulfillment of future obligations and
liabilities.

Foreign citizens may constitute up to 80% of the faculty and academic personnel and
up to 40% of the administrative personnel and staff members in any of the local
branches; Provided, that in no case shall foreign students comprise more than one-
third of the enrolment; Provided, further, that this limitation shall not apply to FHEIs
for foreign residents established pursuant to Section 11 of this Act.

Page 8 of 16


SEC 10. FHEls Owned by Religious Groups. - Foreign religious groups or mission
boards may establish, or continue to operate in the country, FHEls, courses, and
programs that are solely owned by such foreign religious groups or mission boards,
or with foreign equity amounting to more than 40%. Provided, that Filipino students
shall comprise not less than two-thirds enrolment in the said schools.

SEC 11. FHEls for Foreign Residents. — FHEls for foreign temporary residents
may be established and allowed to operate in the country. These institutions may be
solely owned, controlled, and administered by foreign citizens. Likewise, all faculty,
staff, and student may comprise wholly of foreign citizens. An FHE! is deemed
established specifically for foreign temporary residents when at least fifty percent
(50%) of the student population, and twenty-five percent (25%) of faculty members,
are foreign citizens; Provided, further, that the TNHE shall have a maximum of ten
(10) years from its initial operation within which to comply with the 50% requirement
for foreign students and 25% faculty members, after which, TNHEs that fail to meet
this threshold shall be required to comply with the ownership and administration
requirements specified under Section 5 (a) and (d) of this Act.

Provided, finally, that these institutions shall first obtain the necessary license and
permits from the SEC or DTI, as the case maybe, and where applicable, from
appropriate LGUs; and shall comply with the provisions of Batas Pambansa Big. 68,
otherwise known as “The Corporation Code of the Philippines”, Republic Act No.
7042 as amended by RA No. 8179, otherwise known as the “Foreign Investments
Act of 1991”, and other relevant laws, rules, and regulations.

FHEls may be established in special economic zones to cater to the needs of foreign
investors and their dependents in the said special economic zones. Such FHEls
shall be entitled to all the benefits granted to institutions and enterprises under
Republic Act No. 7916, as amended by Republic Act No. 8748, otherwise known as
"The Special Economic Zone Act of 1995"; Provided, that in cases where these
FHEls are granted similar benefits and incentives in any other laws, rules, and
regulations, the provisions most beneficial to the FHElIs shall apply, but in no case
shall there be a duplication of benefits and incentives to be enjoyed by any FHEI.

SEC. 12. Establishment of Special Economic Zones for TNHEs. — TNHE zones
or hubs, as defined under Section 3 of this Act, may be established in selected
areas, in accordance with the guidelines for the establishment of special economic
zones as specified in the Special Economic Zone Act and its Implementing Rules
and Regulations. All FHEIs established within the TNHE zones and hubs shall be
entitled to all incentives granted to enterprises in the economic zones.

The PEZA and CHED shall issue the necessary guidelines to facilitate the
establishment of TNHE zones or hubs.

SEC. 13, Philippine HEIs Operating Offshore. — Philippine HEIs operating offshore
shall conform to the following guidelines:

a) Only Philippine HEIs with programs recognized by CHED may be given
government authority to offer services offshore. Philippine HEIs providing

Page 9 of 16


education offshore must preserve the reputation of the Philippines as a
provider of quality higher education;

b)

Philippine HEls operating offshore should abide by the laws, rules, and
regulations of the country where it seeks to operate or deliver its educational
programs; and

0)

In cases where offshore students are to spend a period of time in the
Philippines as part of course or program requirements, the HEIs should
provide students support servicers as necessary, including information on
legal requirements and livi8ng arrangements.

SEC. 14, Programs and Degrees Offered. - Courses offered by TNHEls may
include undergraduate, graduate, and post-graduate degrees. The CHED, in
consultation with stakeholders including higher education institutions and appropriate
government agencies, may determine the propriety of offering other specialized
courses including Bachelor of Laws and Bachelor of Medicine, by qualified
institutions.

Prior to offering, all TNHEI shall submit their curricula to CHED, which shall review
and ensure that such curricula conform to international standards; Provided that the
curricula of TNHEls which belong to the top 400 World Best Universities of reputable
International Ranking Institutions are deemed to have meet international standards;
Provided, further, that when the TNHE! fall out of the top 400 ranking, its subsequent
new programs or offerings shall be reviewed by CHED whether the same meet
international standards.

SEC. 15. Quality Assurance. — Entities engaged in TNHE, which includes both the
awarding institutions and providing institutions, shall be accountable and fully
responsible for quality assurance and control. They shall develop, implement, and
review internal quality assurance processes, and cooperate with quality assurance
reviews by CHED or other duly recognized local or international audit and
accreditation bodies, These processes will protect and strengthen the reputations of
bona fide institutions engaged in TNHE; and at the same time, protect students and
other stakeholders from low quality provision and from disreputable institutions that
are engaged in malpractice and fraud.

The TNHEls are not required to comply with CHED standards, provided that they are
compliant with international standards. To facilitate the entry of high-ranking
universities in the country, TNHEls ranking in the top five hundred (500) for three (3)
consecutive years in any international rating institutions acknowledged by CHED
shall be presumed to be compliant with international standards and shall enjoy
exemption from any other quality assurance reviews by CHED or other audit and
accreditation bodies. Provided, that after three years, the CHED will review the
qualifications of the TNHEls, and whenever the TNHEI falls out of the top 500
ranking, it shall be required to undergo quality assurance processes as provided in
this section.

The CHED shall issue the necessary guidelines for the implementation of this
section.

Page 10 of 16


SEC. 16. Benchmarks for Ensuring Quality of TNHE. — |n reviewing the
performance of TNHEls, the CHED, or other duly recognized local or international
audit and accreditation bodies, may ascribe weight to the following performance
indicators:

a) Curriculum innovation, which pertains to the manner and degree to which
the curricula are relevant and adaptable to current and global developments,
trends, and values. Curriculum innovation includes the assessment of whether
certificates, diplomas and degrees granted by the TNHEls conform to
internationally accredited programs by reputable international accreditation
bodies; whether certificates, diplomas, and degrees granted by the TNHEIs
are accredited both in the sending and receiving jurisdictions; the presence of
study-abroad programs whose certificates, diplomas or degrees are
accredited in both the sending and receiving jurisdictions; the accreditation
and reputation of partner institutions; and cross-border delivery of academic
services;

b)

Student diversity, which includes the promotion of a respectful classroom
climate under egalitarian norms and principles; encouraging plurality of the
contribution of diverse perspectives based on differences in race, gender,
religion, and culture, implicit and explicit; use and monitoring of vernacular in
ways that consider implicit assumptions, exclusions, overgeneralizations,
stereotypes, and social discrimination;

°)

Research and development, which can be measured in terms of the number
and quality of articles and papers published in international journals and other
publications and/or used in international forums and conferences;

d)

Graduation and retention rate, which pertains to the number of first-year
students who graduate within a given time period in light of course
requirements and internationally acceptable best practices;

e)

Job placement and career services, which generally refers to the
effectiveness of in-house career services that educate, connect, and advise
students and new graduates about opportunities for internships, externships,
fellowships, post-graduation employment opportunities, and career
advancement. Job placement services include the degree to which the TNHE!
can structurally align its graduates to both general employment demands and
specific industry demands in local and foreign markets;

f) Facilities and infrastructure, which pertains to the physical capacity of the
school's facilities and infrastructure to address the needs of the programs in
accordance with set standards, as well as provide for the welfare of students
and teachers, Provided, that students’ experience on the availability,
adequacy, and suitability of facilities and infrastructure shall be assessed
through surveys and other appropriate means;

Faculty and faculty diversity, which pertains to the credentials of the faculty
in terms of their education, work background and expertise, and their
involvement in research and other institutions in their field. Greater weight is

9,

Page 11 of 16


h

k)

D

given to institutions with a higher percentage of full-time faculty holding
doctorates or equivalent degrees in their fields. Visiting faculty from other
regions, countries, cultures, and backgrounds are encouraged. There should
also be a sufficient number of qualified faculty to adhere to a faculty to student
ratio under internationally accepted best practices;

Alumni leadership and performance, which includes entry-level and mid-
career-level income of alumni; for public interest positions, the international
reputation of the positions which alumni hold; alumni performance and
passing rates in licensure examinations, especially those examinations
administered by jurisdictions in major economics beyond the Philippines;
performance and passing rates in internationally acceptable standardized
tests and testing methods by foreign jurisdictions; the extent to which the skill
sets of alumni meet legitimate employment demand in domestic and foreign
markets; alumni mobility and transferability of one's skill set across
jurisdictions or industries;

Alumni participation, which may be measured in terms of donations,
endowment building, network building and network database management,
alumni-initiated partnerships and linkages, extent and reach of foreign alumni,
alumni cohesiveness

International linkages, which refer to institutional relationships made on the
basis of formal or informal agreements, which lead to cooperative action
resulting in the accomplishment of shared or specific objectives by the parties
involved. Provided, that the number of signed agreements alone shall not be
sufficient basis for assessing international linkages. The CHED, or other duly
recognized local or international audit and accreditation bodies, may identify
other basis for assessing performance relevant to international linkages, such
as the benefits that accrued or are expected to accrue to TNHEls as a result
of agreements entered into.

Grant and endowment management, which pertains to how effective the
TNHE! can build and manage an endowment corpus for purposes of
sustaining a system of scholarships and fellowships, such as the sustainability
of its endowment, the efficiency of grant compliance measures and grant
administration, progressive per capita-endowment ratios, and the degree to
which the endowment can fund operating expenses otherwise financed by
tuition;

Other criteria analogous to the foregoing;

The following criteria may also be considered: i) Environmental sustainability; ii)
Gender and race sensitivity; iii) Social responsibility; iv) Housing facilities, both in-
house and affiliated housing; v) Health facilities and medical services; vi) Retirement
facilities; v) Job generation; and Other quasi-indicators analogous to the foregoing

SEC. 17. Creation of Transnational Higher Education Division. — There is hereby
created an Office under the International Affairs Staff of the CHED, to be known as
the Transnational Higher Education Division, to act on all matters related to TNHE

Page 12 of 16


institutions and programs established in the country, whether existing or yet to be
established. In the performance of its functions, it shall coordinate with the Technical
Committee for Transnational Education and the Technical Panel for Distance
Education

The functions of the Transnational Higher Education Division shall include:

a) Assist CHED in determining participation of individuals/HEls in international
academic programs;

b)

Accept, evaluate, and process all applications of FHEls for authority to
operate an educational and/or auxiliary service;

°)

Closely coordinate with concerned government agencies including the SEC,
Bureau of Immigration, Professional Regulation Commission (PRC), Bureau
of Internal Revenue (BIR), the appropriate local government units (LGUs),
and all other concerned government agencies, for the purpose of facilitating
and expediting the processing and acquisition of the necessary documentary
requirements and permits of the FHEIs authorized by CHED to establish and
operate TNHE and auxiliary services in the country, as well as for faculty,
students, academic personnel, and other staff members certified as such by
TNHEls operating or duly authorized to operate in the country;

d) Assist CHED in conducting review and evaluation of TNHE! performance,
including visitation and other regulatory activities, for purposes of determining
compliance with Philippine laws, rules, policies, and regulations; and
recommend the necessary sanctions in cases of violations, including
revocation of authority to operate a TNHE and/or auxiliary service;

) Perform such other duties and functions necessary to carry out the purposes
of this Act.

The functions currently being performed by other offices and divisions of CHED in
relation to transnational education, including those undertaken by the Programs
Development Division under the Office of Programs and Standards Development,
are hereby transferred to the Transnational Higher Education Division.

SEC.18. Role of Government Agencies. — Consistent with the policy and objective
of encouraging, promoting, and accelerating the establishment of TNHE institutions
and programs in the country, all concerned government agencies and LGUs are
hereby mandated to establish mechanisms to expedite the processing of the relevant
applications, documents, and permits for FHEls and all other institutions authorized
by CHED to establish and operate education and auxiliary services in the country.

a) The SEC is hereby mandated to establish a mechanism to facilitate and
expedite the processing of the applications for registration to operate
transnational higher education and/or auxiliary services, as well as registration
of partnerships, corporations, or other arrangements established under this

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b) The concerned LGUs are hereby directed to establish a mechanism to
facilitate and expedite the processing of business permits for TNHE
institutions and partnerships;

©)

The Bureau of Immigration is hereby directed to establish a mechanism to
facilitate and expedite the processing of VISA and other immigration
requirements for foreign faculty, academic personnel, and all staff members
who work in an institution/study program established through a transnational
arrangement; and for students who are enrolled or registered for a course of
study or parts of it, in a TNHEl.

qd)

The Professional Regulation Commission (PRC) is hereby directed to
establish a mechanism to facilitate and expedite the processing of certificate
of registration/license and professional identification cards, as required in
accordance with Section 7, paragraphs (J) and (L) of Republic Act No. 8981,
otherwise known as the “PRC Modernization Act”, and related Resolutions
and Issuances, to be issued to foreign faculty and other international
academics who work in an institution/study program established through a
transnational arrangement.

Within six (6) months from the effectivity of the Implementing Rules and Regulations
of this Act, the foregoing government agencies shall submit a report to Congress as
to the status and progress of the respective mechanisms formulated and established
under this Section.

SEC. 19. Tax Exemptions. — Pursuant to Section 4, Article XIV of the Constitution,
all revenues and assets of non-stock, non-profit TNHEIs which are used actually,
directly, and exclusively for educational purposes shall be exempt from taxes and
duties. All grants, endowments, donations, or contributions used actually, directly,
and exclusively for education purposes shall likewise be exempt from tax, Further, in
accordance with Section 28, Article VI of the Constitution, all lands, buildings, and
improvements, actually, directly, and exclusively used for educational purposes shall
be exempt from taxation. All non-stock, non-profit TNHEls shall also be entitled to all
tax incentives granted to such entities by the National Intemal Revenue Code
(NIRC), BIR Rules and Regulations.

SEC. 20. Proprietary TNHE Institutions. — All TNHEl!s which do not satisfy the
definition of “non-stock, non-profit educational institutions” within the meaning of the
NIRC are deemed, for purposes of this Act, to be proprietary educational institutions.
Al proprietary educational institutions shall be subject to the taxes, exemptions, and
other duties and privileges under the NIRC, specifically Section 27, Title II, Ch. IV
thereof, and BIR Implementing Rules and Regulations.

To the extent applicable, TNHEIs shall enjoy the same benefits, tax credits and
incentives provided for in existing laws including those provided under Executive
Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and
Republic Act 7844, otherwise known as the Export Development Act of 1994.

SEC. 21. Remittance of Profits and Repatriation of Investment. — Without prior
approval of the Bangko Sentral ng Pilipinas (BSP), profits and other earnings of

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foreign investments in TNHEls may be remitted outward, and foreign investments
may be repatriated, using foreign exchange sourced from authorized agent banks
(AAB) and/or AAB-subsidiary/affiliate foreign exchange corporations, provided that
such foreign investments have been previously registered with the BSP.

SEC. 22. Income of Foreign Faculty and Staff. — The income, including
allowances and honoraria, received by foreign faculty, academic personnel, and all
staff members who work in an institution/study program established through a
transnational arrangement, shall be free from taxes, provided that these are derived
from work directly performed, and paid by, the TNHEls. All other income derived
from other sources shall be subject to applicable taxes under the NIRC, BIR Rules
and Regulations.

SEC. 23. Labor and Management Relations. — Labor and management relations in
all TNHE!s shall be governed by existing labor laws. Employees and personnel of
TNHEls shall enjoy working conditions not less than those provided under the
Philippine Labor Code and other relevant laws, issuances, rules and regulations of
the Philippine government and the Department of Labor and Employment.

SEC. 24. Termination of Partnership or Closure of Program. - In the event of
termination of a partnership or phase out/closure of a program, institutions engaged
in TNE should ensure that commitments made to enrolled students are met,
including offering students suitable alternative pathways for completing the program
to which they have been accepted

The assets of the closed enterprise can be transferred and the funds can be remitted
out of the country subject to the rules, guidelines and procedures prescribed jointly
by the BSP, the Anti-Money Laundering Council, and the Department of Finance.

SEC. 25. Implementing Rules and Regulations. — Within ninety (90) days after the
effectivity of this Act, the CHED, with technical support of the Technical Committee
for Transnational Education and the Technical Panel for Distance Education, and in
consultation with the TESDA, PRC, Bureau of Immigration, SEC, Board of
Investments, and other stakeholders and relevant government agencies, shall
formulate the implementing rules and regulations of this Act. Such rules and
regulations shall take effect fifteen (15) days after their publication in a newspaper of
general circulation in the Philippines

SEC. 26. Appropriation. - The amount necessary to carry out the provisions of this
Act shall be charged against the current year's appropriation of the CHED. Expenses
incurred by SEC, BI, PRC, and the appropriate LGUs in relation to Section 16 of this
Act shall be charged against their respective current year's appropriation. Thereafter,
the amount necessary for the continued implementation of this Act shall be included
in the Annual General Appropriations Act.

SEC. 27. Suppletory Application. —The applicable provisions of Republic Act No.
8424, otherwise known as the Tax Reform Act of 1997, further amending
Presidential Decree No. 1158, otherwise known as the National Internal Revenue
Code, as amended; Executive Order No. 226, otherwise known as the Omnibus
Investment Code of 1987; Republic Act No. 7916, as amended by Republic Act No.

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8748, otherwise known as "The Special Economic Zone Act of 1995"; Republic Act
7844, otherwise known as the Export Development Act of 1994 and Republic Act
10650, otherwise known as “Open Distance Learning Act”; insofar as they are not
inconsistent with the provisions of this Act, shall apply suppletorily.

SEC. 28. Separability Clause. — The provisions of this Act are hereby declared
separable, and in the event one or more of such provisions, or part thereof, is
declared unconstitutional, such declaration of unconstitutionality shall not affect the
validity of the other provisions of this Act.

SEC. 29. Repealing Clause. — All laws, acts, presidential decrees, executive orders,
proclamations and/or administrative regulations which are inconsistent with the
provisions of this Act, are hereby amended, modified, superseded or repealed
accordingly.

SEC. 30. Effectivity. - This Act shall take effect fifteen (15) days following the
completion of its publication in two (2) national newspapers of general circulation.

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