JADAONE, MARYSHELL M.

BSA-3/APACGOV

1). What are the requisites for exemption of non stock not for profit corporation?

The two requisites for exemption of non stock not for profit corporation are:

1. Organized “exclusively” for one or more of the following purposes: religious, charitable,
scientific, athletic, social welfare, cultural purposes, or for the rehabilitation of veterans;
and Civic leagues or organizations operated exclusively for the promotion of social
welfare; and Non-stock, non-profit educational institutions (Tax Code Section 30(e), (g),
and (h)).
2. No part of their net income or asset belongs to or inures to the benefit of any member,
organizer, officer, or any specific person

2). What rules do non-profit follow?

Non-profit organizations are considered corporations and they have many of the same
rules and formalities as their corporate partners. Non-profit entities must keep good
records. They must record meetings of minutes and set up a separate bank account. All
profits must be used in the organization’s work and non-profit organizations are not
allowed to distribute profits to members for any reason.

Non Profit Organizations are prohibited from having stockholders. No part of the income
of an NPO is distributable as dividends to its members, trustees, or officers; and all
profits shall be used in furtherance of the organization’s objectives (Revised Corporation
Code Section 86). In addition, for accredited non-stock, non-profit corporations, the law
specifically states that no part of the net income or assets may “belong” to any member,
organizer, officer, or specific person (Revenue Regulation No. 13-98 Section 1(a); Tax
Code Section 30(E) and (G)).

3). How does one set up and register a “not for profit organization”?

To set up and register a non-stock, non-profit corporation, the following details are needed;

 DETAILS OF INCORPORATORS
1. At least five (5) incorporators, majority of them must be residents in the Philippines;
2. Complete address of each incorporator;
3. BIR Tax identification number (TIN) of each incorporator;
4. Contribution of incorporators and members;

Based on the above details, you may now proceed with the documentation. Securities and
Exchange Commission (SEC) in the Philippines would require the following documentary
requirements:
Basic SEC Requirements

1. Name verification slip of the company name to be used. This should be reserved
manually with the Securities & Exchange Commission (SEC) for minimal fees – P40.00
for every 30 days up to a maximum of 90 days subject to renewal or online through the
SEC -Register;
2. Articles of Incorporation and By-laws;
3. Joint affidavit of two (2) incorporators undertaking to change name;
4. List of members, as certified by the corporate secretary, unless already stated in the
Articles of Incorporation; and,
5. List of names of contributors or donors and the amounts contributed or donated, as
certified by the treasurer.

Additional SEC Requirements

o For Foundation – Notarized certificate of bank deposit of the contribution of not less
than P1M along with statement of willingness to allow SEC to conduct an audit;
o For Religious Corporation – Refer to Setions 109-116 of the Corporation Code of the
Philippines, and an affidavit of affirmation or verification by the chief priest, rabbi,
minister or presiding elder;
o For Federations – Certified list of member-associations by Corporate Secretary or
President;
o For Condominium corporations or associations -Master Deed with primary entry of
the Register of Deeds and certification that there is no other existing similar
condominium association within the condominium project.

SEC in the Philippines has a set of express forms for some ready to fill-out SEC registration
forms. Alternatively, you may have your own customized forms and documents that is in
accordance with the format of SEC in relation to the provisions of the Corporation Code of
the Philippines applicable to non-stock, non-profit corporations in the Philippines. You may
need an assistance of a lawyer or somebody with better appreciation of the requirements for
registering a non-stock, non-profit corporation in the Philippines.

 SEC APPLICATION AND APPROVAL

Initial registration papers carefully prepared for the purpose will undergo initial
evaluation of the SEC, and finding the same in order will be assessed filing and other fees
based on the proposed capitalization. Payment of the filing and other fees marks the formal
filing of the application and normal approval procedures would immediately follow.
Approval normally comes in a couple of days to not more than ten (10) days.

 TAX AUTHORITY REGISTRATION

 SEC will assign a tax identification number (TIN) upon release of the Certificate of
Incorporation in the Philippines and such TIN shall be formally registered with the Bureau
of Internal Revenue (BIR). Certain registration fees and taxes will be paid and other
registrations for books of accounts, and official receipts or invoices will follow. For tax
exemptions of non-stock non-profit corporation in the Philippines, you need to secure BIR
ruling with the tax authority with the Revenue District Office (RDO) of registration.

 BUSINESS PERMITS AND LICENSES

For the legality of its local operations, business permit has to be secured with the
local government unit of business location. Certain fees and other registrations are likewise
required such as community tax certificate, barangay clearance, fire permit, occupancy
permit, and the likes.

 EMPLOYEE SAFEGUARDS AND REGISTRATIONS

Employer registration with the Social Security System (SSS), Philippine health
Insurance Corporation (Philhealth), and Home Development Mutual Fund (HDMF) is
likewise mandatory and will proceed independent of the above.

 COMPLETE PROCESSING TIMETABLE

With the improved processing system of the government agencies, complete

processing of the above will take three (3) to four (4) weeks from filing with the Securities
and Exchange Commission. We suggest you secure the services of professionals to assist you
in the complete registration of your Philippine Company that you may be able to simply
concentrate on operational matters.