In the Philippines, setting up a Non-Governmental Organization (NGO) requires formal legal recognition to operate legitimately, enter into contracts, open bank accounts, and secure tax exemptions. The primary regulatory body responsible for this is the Securities and Exchange Commission (SEC).
Under Philippine law, an NGO is registered as a Non-Stock Corporation governed by Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (RCC).
1. Legal Classifications of Non-Profit Entities
Before compiling documentation, an organization must determine its specific legal classification under the SEC. The two most common paths for NGOs are:
- Standard Non-Stock, Non-Profit Corporation: Formed for charitable, religious, educational, athletic, cultural, or fraternal purposes. It does not have capital stock, and no part of its income is distributable as dividends to its members, trustees, or officers.
- Foundation: A specific type of non-stock, non-profit corporation established to extend grants or endowments, or to conduct charitable, religious, educational, athletic, or cultural activities. Foundations are subject to stricter financial and disclosure requirements.
Comparison Matrix: Non-Stock Corporation vs. Foundation
| Feature | Standard Non-Stock Corporation | Foundation |
|---|---|---|
| Name Requirement | Must include "Inc.", "Association", or "Organization" | Must explicitly include the word "Foundation" |
| Minimum Contribution | No statutory minimum initial contribution | Minimum of Php 1,000,000.00 initial capital |
| Primary Document | Standard Articles of Incorporation & Bylaws | Requires an additional Modus Operandi statement |
| Regulatory Scrutiny | Standard annual reporting | Heightened anti-money laundering (AML) monitoring |
2. Core Documentary Requirements for SEC Registration
To register a standard non-stock corporation, the following documents must be prepared, executed, and submitted through the SEC’s online portal, the Electronic Simplified Processing System (eSPARC):
- Articles of Incorporation (AOI): This document defines the corporation's purpose, principal office address (must be specific), names and nationalities of the incorporators, and the composition of the Board of Trustees.
- Bylaws (BL): This outlines the internal governance of the NGO, including rules on membership meetings, voting power, election of trustees/officers, and financial management.
- Name Verification Slip: A formal reservation confirmation generated via eSPARC ensuring the corporate name is unique and compliant with SEC guidelines.
- List of Members: A certified list of the initial members of the organization.
- List of Contributors/Donors: A document certifying the names of individuals or entities who provided initial funding, along with their respective contribution amounts, certified by the designated Treasurer.
- Undertaking to Change Name: A notarized statement pledging that the organization will change its corporate name immediately if another entity is found to have a prior vested right to it.
Additional Requirements for Foundations
If the NGO is registering specifically as a Foundation, it must additionally submit:
- Notarized Certificate of Bank Deposit: Proof of the minimum Php 1,000,000.00 initial contribution deposited in a Philippine bank.
- Modus Operandi: A detailed narrative statement outlining how the foundation intends to accomplish its objectives, its source of funds, and its target beneficiaries.
3. Step-by-Step SEC Registration Process
The SEC has modernized its system, moving the bulk of the registration process online through the eSPARC portal.
Step 1: Account Creation and Name Reservation
The applicant must create an account on the SEC eSPARC portal. Once logged in, the applicant inputs the proposed name. The system automatically screens the name against existing corporations. Once approved, the name is reserved for a specified period upon payment of a nominal reservation fee.
Step 2: Inputting Corporate Details
The applicant fills out the digital forms on eSPARC, inputting information regarding the principal office address, specific purposes (which must be precise and aligned with non-profit laws), terms of existence (perpetual by default under the RCC), and the identities of the incorporators and trustees.
Step 3: Review and Payment
The SEC reviews the online application. Once it passes preliminary evaluation, the system generates the formal Articles of Incorporation and Bylaws for download, printing, and execution (signing and notarization). The applicant then pays the registration fees via the SEC electronic payment portal or accepted over-the-counter channels.
Step 4: Submission of Physical Documents
After payment, the signed and notarized hard copies of the application documents, along with proof of payment, must be submitted to the SEC Selected Processing Office or Head Office for final verification.
Step 5: Issuance of Certificate of Incorporation
Upon successful verification of the physical documents, the SEC issues the digital or physical Certificate of Incorporation. This marks the exact date the NGO acquires its juridical personality.
4. Post-Registration Mandates and Compliances
Securing the SEC Certificate of Incorporation is only the initial legal hurdle. To maintain good standing and operate legally within the Philippines, the NGO must immediately undertake the following steps:
Internal Revenue and Local Government Compliance
- Bureau of Internal Revenue (BIR) Registration: The NGO must apply for its own Taxpayer Identification Number (TIN), register its Books of Accounts, and secure an Authority to Print (ATP) Official Receipts/Invoices.
- Tax Exemption Ruling: Registration as a non-stock corporation does not grant automatic tax exemption. The NGO must formally apply for a Tax Exemption Ruling under Section 30 of the National Internal Revenue Code (NIRC) to be exempt from corporate income tax on its charitable revenues.
- Local Government Units (LGU): The NGO must obtain a Barangay Clearance and a Mayor's/Business Permit from the municipality or city where its principal office is located.
Mandatory Annual SEC Filings
To avoid heavy penalties or the revocation of its corporate franchise, an NGO must submit the following reports annually:
- General Information Sheet (GIS): Filed within 30 days from the date of the annual members' meeting, updating the SEC on changes in membership, trustees, and officers.
- Audited Financial Statements (AFS): Stamped received by the BIR, filed according to the SEC’s annual coding schedule.
- Sworn Statement of Sources, Amount, and Application of Funds: Required for NGOs whose gross receipts fall below a certain threshold in lieu of a full AFS, ensuring financial transparency.
5. Secondary Licenses for Special NGO Functions
Depending on the specific advocacies of the NGO, it may be required to register with auxiliary government agencies before commencing specific programs:
- Social Welfare/Development: NGOs operating orphanages, rehabilitation centers, or community welfare programs must secure a license to operate from the Department of Social Welfare and Development (DSWD).
- Foreign Funding: NGOs receiving grants or donations from foreign governments or international agencies must ensure adherence to anti-money laundering provisions and register programs with the Department of Foreign Affairs (DFA) if required by bilateral agreements.