ABS-CBN Foundation; GMA Foundation; Bantay Bata Foundation; and similar others are among the popular foundations in the Philippines. These foundations are classified under the Corporation Code as non-stock corporations in the Philippines. Said Code further defines these corporations as follows:
Sec. 87. Definition.—For the purposes of this Code, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution: Provided, that any profit which a non-stock corporation may obtain as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized, subject to the provisions of this Title.There are various purposes for the establishment of above corporations as enumerated by the Code, namely: 1) charitable; 2) religious; 3) educational; 4) professional; 5) cultural; 6) fraternal; 7) literary; 8) scientific; 9) social; 10) civic service or similar purposes like trade, industry, agricultural, and like chambers, or any combination thereof.
So how then can these corporations be established? The same Code provides that provisions governing stock corporations shall likewise be applicable to non-stock corporations, except as may be covered by specific provisions.
Peculiarities in the establishment of non-stock corporations include among others, the required form for the articles of incorporation. Said articles almost have the same form as that of stock corporations, except for the following:
Article VI of the 1987 Philippine Constitution provides:
Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, educational, and charitable purposes shall be exempt from the rules of Philippine taxation.
As long as both the land and building are actually, directly, and exclusively used for charitable purposes of the foundation, the real property tax exemption applies.
Gifts made in favor of foundations are exempt from donor’s tax as long as said foundation meets the following requirements:
b.1 a maximum of 30% of the gifts is used for administrative purposes;
b.2 the foundation must be organized as a non-stock, non-profit organization;
b.3 it must be under the management of trustees who do not receive any compensation;
b.4 it must not be authorized to receive dividends; and
b.5 it must devote all its income to the accomplishment and promotion of its purposes