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Requirements of a Foundation in the Philippines | Manila Legal - Philippines Largest Legal Network

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How To Establish A Foundation in The Philippines




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:

  1. Authorized capital stock of the corporation in the Philippines;
  2. Twenty-five percent (25%) subscription of the authorized capital stock and the names as well as nationalities of the subscribers; and
  3. Treasurer’s affidavit attesting to the fact that at least twenty-five percent (25%) of the above subscription has been paid
In the case of non-stock corporations, the above-mentioned items may be modified accordingly. The Code merely requires the corporation to state the amount of capital or money contributed or donated by specified persons. Along with this, the names, nationalities, and residences of the contributors or donors as well as the respective amounts given by each must also be itemized.

With respect to foundations, the Philippine Securities and Exchange Commission (SEC)–the government agency tasked to implement the provisions of the Corporation Code, specifically requires said foundations to furnish 1) a notarized Certificate of Bank Deposit of the contribution of not less than P1,000,000.00 ; and 2) a statement of willingness to allow the Commission to conduct an audit.

Advantages in Establishing a Foundation

Indeed, it is relatively easy to establish said foundation. Moreover, it also has lots of advantages, particularly the grant of the following tax exemptions:
  1. Exemption from real property tax

  2. 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.

  3. Exemption from donor’s tax

  4. 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

Setting up a foundation receives a lot of encouragement from the Philippine government because of the help it extends to society as a whole. Nevertheless, all of those perks and benefits granted must be viewed by said foundations not only as full support in their endeavors, but also as a constant reminder of taking public service by heart.


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