Rules and Regulations to Implement Section 24 of Republic Act No. 2067

January 17, 1967

NSDB RESOLUTION NO. 01-67

RULES AND REGULATIONS TO IMPLEMENT SECTION 24 OF REPUBLIC ACT NO. 2067, AS AMENDED BY REPUBLIC ACT NO. 3589

Pursuant to the provisions of Section 9 of Republic Act No. 2067, (hereinafter referred to as the "Science Act of 1958"), as amended by Republic Act No. 3589, the following rules and regulations are hereby promulgated to implement Section 24 of the "Science Act of 1958".

ARTICLE I

Definition of Terms

For purposes of these rules and unless otherwise indicated, the terms herein enumerated shall have the following meanings:

a. Board — means National Science Development Board.

b. Foundation dedicated to scientific pursuits — means a private science foundation that complies with the requirements set forth in Article IV of these rules.

c. Pure, fundamental or basic research — means the quest or pursuit of new learning, investigation, and/or experiment in any of the scientific disciplines, undertaken generally by one individual or under one person's supervision, which seem likely to advance scientific knowledge or lead to a better understanding of the laws of the universe through new approaches or methodology without entering the field of concrete or utilitarian application. EICSTa

d. Applied research — means scientific work or investigation aimed at a concrete result which will help meet a specific human need and will subsequently lead to the production of substances, or equipment that may be useful to humanity.

e. Developmental work — means labor or action which leads to the practical utilization of a new process discovered by applied research. It does not, in principle, involve the utilization of any new scientific result but usually calls for such empirical, technical, or scientific knowledge in a wide variety of fields and in which only concrete results count.

f. Economic evaluation — means the process of appraising, estimating or determining the economic value of a given process, or product with a view to its commercial exploitation.

ARTICLE II

Application

The following are qualified to apply for certification under Section 24 of the Science Act of 1958:

1. Private foundations engaged in, and whose funds are dedicated to, scientific pursuits; and

2. Private individuals, firms and educational institutions undertaking specific research and development projects.

The application, which shall be under oath and filed in quintuplicate, shall be accompanied by a certified true copy of the applicant's (1) articles of incorporation, (2) by-laws, (3) certificate of registration of said articles of incorporation and by-laws issued by the Securities and Exchange Commission, (4) research and development programs, and (5) description of the specific research and developments projects, whenever applicable. The applicant shall also comply with other requirements as may be imposed by the Board. DHECac

ARTICLE III

Processing of Applications

Applications under these rules shall be processed by the Committee composed of a chairman and four (4) members to be created by the Chairman of the Board by special order. The Committee may conduct an investigation of the applicant foundation. It may request the views and recommendations of any government official or private individuals, and may require the applicant or its representative to appear before it to clarify or substantiate the statements made in the application. The Committee shall submit its findings and recommendations to the Chairman through the Vice-Chairman and Executive Director of the Board within a reasonable period.

ARTICLE IV

Certification for Private Science Foundations

The Board, after taking into consideration the findings and recommendations of the committee created under Article III of these rules, shall issue a certification that the applicant foundation and its funds are dedicated to scientific pursuits. A private science foundation shall be considered to be dedicated to scientific pursuits within the meaning of Section 24 of the Science Act of 1958 if:

1. The articles of incorporation and by-laws as well as their amendments are duly registered with the Securities and Exchange Commission; TCaEIc

2. It is non-stock and non-profit and organized and operated in the public interest and no portion of its funds shall inure to the benefit of private individuals. A foundation shall be considered to be organized and operated in the public interest: (a) if the results of its researches (including any patents, copyrights, processes, or formalae resulting from such researches) are made available to the public on a non-discriminatory basis, unless the granting of an exclusive right is the only practicable manner in which the patent, copyright, process or formula can be utilized to benefit the public; or (b) if its researches are performed for the Republic of the Philippines or any of its agencies or instrumentalities or political subdivisions; or (c) if its researches are directed toward benefiting the public;

3. It shall not engage in unrelated activities;

4. Its articles of incorporation expressly declare that at least fifty-one (51%) per cent of its gross income, as defined in the Revised Internal Revenue Code, shall be devoted to undertaking, directly financing, or assisting pure, fundamental or pure research, applied research, developmental work and/or economic evaluation and/or granting of scholarship for scientific and technological manpower training, including the establishment of professorial chairs, in any or all of the following fields:

(a) Industry

(b) Agriculture

(c) Health Sciences

(d) Biological and physical Sciences

(e) Atomic energy

(f) Food and nutrition

(g) Engineering

(h) Social Sciences and the Humanities

5. It has a program of operation and that its actual operations justify its continuing existence as a viable and actual science foundation rather than as a mere conduit for receiving tax free contributions or funds raised by occasional fund drives. cISDHE

6. Its articles of incorporation further provide that upon its dissolution, its remaining assets shall be disposed of and turned over to any foundation dedicated to scientific pursuits of its choice or to the Republic of the Philippines or any of its agencies or instrumentalities or political subdivisions.

ARTICLE V

Certification for Contributions to Specific Research and Development Projects

The Board may issue a certificate of tax exemption for donations or contributions made or given for the support and maintenance of specific research and development projects undertaken by private individuals, firms and educational institutions, or foundations which do not qualify for certification under the provisions of Article IV of these rules. The aforesaid private individuals, firms and educational institutions shall keep separate books of accounts indicating the amounts of donations received and the purpose or purposes for which they were used, subject to inspection by the Board.

ARTICLE VI

Life of Certifications

All certifications issued under these rules shall be effective for a period of not longer than five (5) years unless sooner revoked.

The said certifications shall be renewed by the Chairman or Vice-Chairman of the Board for the same period of time upon application duly filed in quintuplicate, supported by the following papers:

1. Financial statement of the foundation duly certified by a Certified Public Accountant;

2. Detailed research activities of the foundation during the period covered by the expired certification and program of research or operation for the period covered by the application for renewal of certification; and HDITCS

3. A certified true copy of the amended articles of incorporation and/or by-laws, if any, or a sworn statement that there have been no such amendments.

ARTICLE VII

Revocation

The said certifications shall be revoked by the Chairman of the Board on any of the following grounds:

1. Failure to commence operation within two (2) years from the date of the certification;

2. Deviation from the scientific and/or technological purpose or objectives defined in the articles of incorporation without the written permission from the Board;

3. Channeling of the properties of the certified foundation to the purpose or purposes different from that mentioned in the articles of incorporation;

4. Refusal to allow inspection by the Committee of the Board; or

5. Any violation of these rules and/or the terms and conditions of the certification.

Any revocation made under this article shall retroact as of the date of the last certification of the foundation concerned.

Certifications issued by the Board to private science foundations pursuant to Section 24 of the "Science Act of 1958" before the effectivity of these rules shall terminate either at the end of December 31, 1967, or two (2) years from the date of the original certification whichever date is later, unless renewed pursuant to Article VI. cDAEIH

ARTICLE VIII

Tax Exemption

All funds contributed to the support and maintenance of private foundations certified under these rules and their projects as well as specific research and development projects undertaken by private individuals, firms, or institutions shall be tax-exempt and deductible in their entirety from the income tax returns of the donors. All income of whatever kind and character which said foundation may derive from any of its properties, real or personal, or from its investments shall also be tax-exempt.

ARTICLE IX

Inspection

Foundations certified under these rules shall be subject to inspection at least once a year during office hours by the Committee of the Board created under Article III, or its representatives, which shall submit a report of its findings and recommendations to the Vice-Chairman and Executive Director or Chairman of the Board.

ARTICLE X

Fee

A filing fee of P2.00 shall be collected for each application, and an inspection or service fee of P50.00 shall be paid by every foundation certified under these rules.

ARTICLE XI

Penalty

Any person who evades or defeats or attempts to evade or defeat, in any manner, any tax imposed by law by availing himself of the provisions of Section twenty-four of the Science Act of 1958 through fraud or misrepresentation or violates these rules and regulations shall be punished by a fine of not more than four thousand pesos or imprisonment for not more than one year or both, in the discretion of the Court. ITAaCc

In case the violator is a corporation or association the penalty shall be a fine of not more than ten thousand pesos, without prejudice to the criminal responsibility of the member, officer or employee thereof committing such violation.

Any person who violates any provision of these rules, regulations or orders of the Board issued pursuant to the Science Act of 1958 shall be punished by a fine of not more than one thousand pesos or imprisonment of not more than six months, or both, in the discretion of the court.

In case the violator is a corporation or association the penalty shall be a fine of not more than twenty thousand pesos, without prejudice to the criminal responsibility of the officer, member, or employee thereof committing such violation.

ARTICLE XII

Effectivity

These rules and regulations shall take effect thirty (30) days after publication in the Official Gazette.

APPROVED under Resolution NSDB 247 R. 11, dated January 17, 1967.

Certified Correct:

(SGD.) MANUEL C. HERRERASecretary of the Board

Published in the Official Gazette, Vol. 63, No. 6, page 1365 on February 6, 1967.