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NUMBER 8   JULY - DECEMBER 2007

    FOUNDATIONS IN MEXICAN PRIVATE LAW*
    Pedro Alfonso LABARIEGA VILLANUEVA**

    Original Text (Spanish) PDF

    SUMMARY
    I. Introduction. II. Historical outline. III. Constitutional system. IV. Concept. V. Corporations in private law. VI. Establishment. VII. Elements. VIII. Classification. IX. Legal nature. X. Modification and termination of patrimony. XI. Control system for foundations. XII. Committee powers. XIII. The intervention of notaries and judges. XIV. Tax system for foundations. XV. Other considerations. XVI. Conclusions.


    Foundations
    originate from the principle that
    democracy and philanthropy
    represent fundamental
    concepts.
    Enrique ALATORRE

    I. INTRODUCTION

    Private associations and foundations emerge spontaneously from social life, like powerful means of resistance and onslaught in eternal struggle against nature, in which Humanity depletes and extends itself. But for these to have a legally productive legal life, it is necessary for them to be shaped according to the canons of private law.1

    Moreover, foundations are institutional instruments that society deems fitting, not only and not precisely because of tax benefits, but for their general usefulness.

    This use benefits private assistance —a much solicited application in Mexico and according to new legislation, an exclusive concept— but it is also fitting to point out that this concept is applied in Spain, for example, in sectors never before imagined, such as in economic activities carried out by companies.

    Corporations’ doctrine*** differentiates between the entirety of persons and the entirety of things. Foundations are included in the latter, in which the embodiment of its legal fiction is defined by its patrimony. In some countries, the purpose of these kinds of entireties has been applied to the concept of business corporations by means of extension or symmetry and correlation. In them, it is also the capital and not the individuals that represent them that typifies corporations.2

    Nowadays the existence of substantial capital is more frequent and just ownership creates obligations that are barely tolerable. Then, one makes use of legal fictions to conceal subjective ownership of that portion of the capital under the mechanism of a new fiction: another capitalist group that is only a holding company and that becomes a cover for individual ownership.3

    In these cases, would it not be better for individuals to disassociate or remove themselves from title ownership and the implicated burdens and encumbrances under certain circumstances? We have found that there is now a legitimate and purely functional mechanism for a large number of shares belonging to important companies that have been attributed to foundations for the purpose of unloading personal assets. This significant package of shares is flaunted by foundations, even at the request of past owners or the original holders of said shares.4

    What is true is that regulation and timely development of an institution’s administration, or at least the structure of foundations in said hypothesis, would bring transparency and judiciousness to what is currently done almost accidentally in actual cases in which it is necessary to accumulate patrimony and its ownership may cause problems if subdivided or may give way to excessive encumbrances or obligations for a future purchaser.5

    These considerations have inspired us to discuss certain aspects of foundations, since the concept shows signs of evolving and developing in Mexico, in such a way that it may reach its accurate dimension in legislation.

    The claim of an indefinite term, the precision of the mechanisms for terminating entities and guarantees of permanence in the way of conceiving the institutions’ administrative and representative bodies may perhaps allow the use of the figure in the future when coherent situations appear with the ones up described.

    II. HISTORICAL OUTLINE

    The concept of foundation (patrimony destined for a purpose, to which the law ascribes the trait of corporations) finds it roots in canon law, but is just fully developed in the modern era, through 19th century legal speculation, particularly by Heise and Savigny.6

    Roman jurisprudence, notoriously resistant to any abstraction, does not come —at any time in its history— to conceptualize the personification of patrimony, or its establishment as autonomous entities subject to rights and obligations.7 Corporations, but not institutions, were legal entities in Roman law.8 This did not stop the Romans from deeply perceiving the exigency to allot certain goods for purposes of a timeless nature, going beyond the limits of this life on earth. It cannot even be refuted that they had attributed a patrimonial base for certain situations (the piæ causæ, for example) for every function of the personality (legal capacity). However, it is immediately observed that, in the first case, this requisite was fulfilled through indirect means of various kinds, before the concept of foundation came into use. In the second case, institutes or institutions do not attain general recognition as corporations. In view of this, it seems clear that any research on foundations in the Roman world should be considered erroneous from its onset, or —even more serious— it is destined to result in arbitrary conceptual distortions.9 Despite this, foundations intervivos or mortis causa were frequently used in the time of the Empire, but established as trust foundations.10 Authors like Brinz allude to the establishment of Imperial alimentary foundations (in the late 1st century AD) as true autonomous foundations in the modern sense of the term, which is not likely since they were not granted status of autonomous corporations, that is, the totality of the goods lacked legal status. For which reason the emperor was the holder of said capital.11

    The established practice of allotting goods by means of legacies or donations sub modo (under specific provisions) for social or cultural purposes wanes in the 3rd century and almost disappears completely in the 4th. This is most probably due to the serious economic crisis that afflicted the Empire. In turn, this difficulty led to a true depletion of the vast social phenomenon that characterized the first two centuries of the Christian era. Another determining factor in the decline of the liberality during the era of principalities was the influence of Christianity. Indeed, from the moment Constantine recognized the Catholic Church and its acquiring full legal recognition, it has been considered collegium licitum in which all its assets are restored to it and it is allowed to legally act as such. With this, not only the Church, but also ecclesiastical Christian communities with their private legal capacity came to own patrimony and could accept donations, legacies, etc. Thus, as proclaimed and spread by the fathers of the Church, the concepts of charity and welfare gave rise to the apparition of institutions aimed at helping the poor and the needy. Charity institutions, for public use or of a social and religious nature (churches, monasteries, nosocomianosokomia or hospitals, gerontocomia or shelters for the elderly, brephotrophia or shelters for foundlings, orphanotrophia or orphanages, ptochia o ptochotrophia or shelters for the poor, xenodochia or hospices for pilgrims) were established as a result of confiscating patrimony for religious or altruistic purposes. The origin of these institutions is due to Christianity. These pia corpora were —according to Cossio— truly pious foundations administrated by the Church.12

    It seems to us that these institutes (generally called, piæ causæ eusebeis aintiai— in Justinian terms), already had the legal nature of foundations. As Gaudemet points out, perhaps the goods in question were still parts of private patrimony, allotted to works of charity. However, they did not have their own legal regulations, and therefore, no guarantee of the foundation’s perpetuity. Thus, charitable purposes were to be carried out through Church intermediation, which offered more certainty that the desired purpose would be fulfilled.13

    The positive attitude 5th century emperors had regarding ad pias causas legacies continues, or better said, increases, in the Justinian era. There are several provisions on this subject. As to what is mentioned about the problem of legal status, the situation is not much different from that seen in the Post-Classic era.14

    It is true that under Justinian, charity institutions acquired various legal powers: the power to appear in tribunal (court), to enter into contracts and to accept donations. However, it is clear that there is a lack of its general recognition in absolute terms. In particular, a clear theoretical framework of pious causes is lacking in terms of a profile for embodying patrimony. Institutions limited themselves to obtaining sporadic provisions pertaining to pious legacies here and there, but without ever risking theorization of the phenomenon.15

    Meanwhile, Juan Iglesias holds that the conception of foundations emerges in the Roman institution. Roman doctrine shows that: Justinian legislation does not give clear and categorical legal identity to foundation patrimony. In all, it cannot be denied that signs of autonomy can be found since they are granted the power to inherit, to claim loans, to file legal action and negotiate exchanges or emphyteutical leases. They are the pillars that support the modern concept of independent foundations, that is, of true foundations, in the legal sense.16

    On the other hand:

      It seems that trusts were the first way of founding in Rome.

      In Institutes, Book II, Title XXIII, No. 1, Justinian tells us that trusts originally had no binding legal force. However, “Augustus, either out of regard for various favourites of his own, or because the request was said to have been made in the name of the Emperor’s safety, or moved thereto by individual and glaring cases of perfidy, commanded the consuls in certain cases to enforce the duty by their authority. And this being deemed equitable, and being approved by the people, there was gradually developed a new and permanent jurisdiction, and trusts became so popular that soon a special praetor was appointed to hear suits relating to them, who was called the trustee”.

      However, it is easily understood that trust, even legally recognized ones, were inadequate for creating a foundation that went beyond the life of the trustee. To perfect it, the Greek system of successive transfers was adopted and thus, Justinian Institutes, Book II, Title XXIII, No. 11, tells us that “The transferee may himself be charged by the deceased with a trust to transfer to some other person either the whole or a part of what he receives, or even something different”. In other words, the trustee, that is, the person charged with the pledge, and the beneficiary, can in turn transfer the assets from generation to generation, according to the trustor’s wishes, in order to perpetuate the foundation.

      However, Roman law did not entirely permit the system of successive transfers since trustee substitution was limited by Digest texts to one or two generations and by Novella 159, to four.

      Moreover, specific legacies and donations served as legal means for founding. In the matter of legacies, the first step was given by derogating the principle that no one could stipulate for another person, alteri nemo stipulari potest, and consequently admitting specific testamentary liberality. The Justinian Code says that Emperor Severus was the first to permit the validity of responsibility when it consisted of having a slave manumitted. Once this humanitarian exception was admitted, it later spread until testamentary liberality sub modo was declared valid, as pointed out by Ulpian in the Digest.

      Finally, when the theory about trusts reached its highest degree of perfection, the narrow limits of wills were removed and donations in prospect of death, mortis causa, became widespread, followed by donations between spouses and finally donations intervivos.17

    As mentioned above, canonical science marks the course to be followed in this matter. In effect, canon law is the first to elaborate on the spiritual and transcendental concept of the institution, as well as on the autonomous foundation as a generic utilization of institute.18 To further explain, the concept of autonomous foundation recognized that foundations could be established according to the free will of individuals without any government intervention.19

    Saleilles argues that this is the true one:20

      Foundations in the technical and particular sense of the word consist of independent and autonomous patrimony, established for statutory purposes and that does not work unless it focuses on the objective to be carried out, thus belonging spiritually to an ideal institution, representative of the encumbrance on the property. It is therefore, autonomy par excellence, constitutional independence of property. This ideally belongs to none other than its objective and does not depend on any individual free will. It is an encumbrance that is not only perpetual, as with any legacy sub modo, but is also not subject to the custody of an individual owner. It embodies the notion of both the subject and the object, identifying itself with both concepts so as to thus link the corporation with the matter to be carried out, the first of which exists only in the degree in which the second is carried out.

    Besta21 shows that in wills and donations, goods were often assigned for erecting a church, a hospital, etc. The founder acted as if his wishes would produce a clear effect. The cartula dotalium had but a constitutive effect, that is, creating the foundation without any State intervention.

    The various aspects described above in Roman and canon law are found and established in the Middle Ages. This fusion was not well-regulated, but simply a mechanical integration of conflicting principles, or the insertion of one theory into the another’s school of thought.22

    In effect, the foundational principle emerges in the Middle Ages under the pretext of donations for pious causes (ad pias causas) that some of the faithful, while living or upon their deaths, would hand over to the Church, with order of to assist the poor, the prisioner or the helpless. The goods that were donated formed part of the patrimony allotted for a purpose, which was not to be confused with Church patrimony, but that existed as a different entirety and was clearly separated from Church patrimony. The Church, through its bishop, simply administrated these resources that were set aside to be fulfilled according to the founder’s wishes. This situation that caused was offered to said patrimonies-affectation the legal personality, corporeality or legal capacity so that the Church to could acquire rights and obligations with charge to such goods, without risking its patrimony. Thus, pia opera, piæ causæ, piæ actions, etc., were institutions established by the accumulation of the patrimony that founders allotted to one of the works of mercy.23 Therefore, at that time —Ferrara holds—, foundations were not specified circuitously by means of a specific provision but a foundation is a direct act of creation, of sovereignty.24 Since then, the foundational principle was established forever.25

    This practice remained unchanged until the early 17th century according to some, or until the end of the 18th century, according to others.26 The increase of charitable or religious corporations and foundations, but especially the massive accumulation of goods in the hands of the clergy (goods in mortmain) caused a reaction and prompted the principle of intervention and State control in the creation of legal persons (corporations). Thus, a movement to place all associations and communities under the sovereign’s authority arises in almost all European countries. In France, for example, various edicts appeared: that of November 21, 1629; that of December 1666; even the famous one of 1749 by Chancellor D'Aguesseau. These edicts ordered all schools, monasteries, hospices, etc., to obtain express permission from the monarch, ratified by charters, not only for the establishment of new charity institutions, but also for any acquisitions the establishments themselves might make. Private, autonomous and free corporations are not admitted. According to this provision, there was no other choice than to form part of the State or disappear. Of course, there could be State intervention, but there was also denial regarding the nature of the collective entity. It did have legal personality, but it was from the State, for the State and under the State.27

    Though initially directed at clerical goods in mortmain, these orders were extended to include any entity, which is why it can be stated that State interference comes from those provisions that prohibited corporations from acquiring goods and accepting inheritances and legacies, except those that were approved by the government.28

    This inflexible notion gradually mitigated until it was replaced by modern legal State doctrine, in which the State no longer has absolute power over any thing of common utility, and recognizes, while preserving, institutions that are independent of it and that have their own goals and associated regulations.29

    Of course, the nature of recognition has changed over the centuries. In Roman law, authorization was the permission for the right of association, since the legal status arose naturally from the existence of the collegium. In medieval jurisprudence, approval from higher authority served as the concession of privileges, which belonged to the king, since only the sovereign had the power to erect a new school. With the appearance of the police State, the bequest takes on political hues, and is presented as being incorporated into public administration. Finally in modern law, on separating the right of association from the ascription of legal, recognition takes on its true dimension of a governing principle.30

    Thus, the rule of freely establishing autonomous foundations, established by simple free will of an individual, under the principles of Roman-Canon doctrine, was fully admitted during the Middle Ages, until it embedded itself in modern legislation.31

    III. CONSTITUTIONAL SYSTEM

    Citizen participation which is tied in with the concept of charity or aid is somewhat embodied in paragraph 9, clause III, of Article 27 of the Mexican Constitution, by stating that:

      Either public or private philantropic institutions that have for their object to help out people in need, to carry out scientific research, to promote teaching, to encourage the mutual aid between it members or to achieve any other legal objective, may not acquire more real property than is neccesary for the object immediately or directly destined to them, subject to what the regulating law establishes.

    This section represents the legal basis of existence of the foundations because grant them legal capacity to acquire real estate.

    However, since some believe that which is set forth in this precept is insufficient, it has been suggested that the principle of social solidarity, both public and private, be expressly incorporated into the Constitution and that tax incentives for citizen participation for the benefit of the community be awarded (an addition to Article 25 of the Constitution); and the State’s decisive encouragement, for example, in its educational system, with the aim to instill in the student awareness of national and international solidarity (an addition to Article 3 of the Constitution).32

    IV. CONCEPT

    To found is “to allot capital for perpetuity to a purpose”.33 The word foundation then alludes to the perpetual encumbrance of goods for a determined purpose.34 It is also conceived as an entirety of personalized goods, in attending the purpose that gives it unity.35 That is, the group of assets (universitas bonorum) allotted to the pursuit of certain purposes and, for this effect, endowed with legal status.36

    Succinctly, it is defined as “the legal entity of patrimony stably ascribed to a general purpose”.37

    According to Lehmann, it deals with an organization that comes into being through the declaration of individual free will in order to attain a lasting purpose, with an independent legal status, without negotiating an alliance of people, and with patrimonial resources to attain the established purpose in the foundational business.38

    Del Vecchio gives us a concise idea, by stating that a foundation is the group of goods allotted to a specific purpose by an irrevocable act of free will, in perpetuity or for an undetermined term.39

    By this definition, there are some40 who understand it as:

      A type of corporation of private origin and of public interest, the birth of which takes place as a result of a unilateral and not inherited legal business (called foundational), for which the founder (or founders) declares, irrevocably and not subject to specific formalities if the business is inter vivos, his wishes, with the faculty of rescission if instituted by means of a will, for a certain institution or work to emerge for carrying out one or various specified purposes of usefulness or charity, generally of a permanent nature, to which effect a ample set of goods or rights are allotted for it.

    Based on Article 60 of the Swiss Civil Code, foundations were perceived as “the allocation of patrimony for a specific objective, lawful and generally permanent purpose, with a tangible and administrative structure governed by the purpose to be carried out”.41

    French law on the development of sponsorship states that “a foundation is an act by which one or more individuals or legal entities decide to make an irrevocable allocation of goods, rights or resources in order to carry out non-profit work of public” (Article 18, paragraph 1).42

    Spanish Law on Foundations and Tax Incentives for Private Participation in Activities of General Interest says that “foundations are non-profit organizations whose assets are, according to the wishes of the founders, allocated permanently to the fulfillment of general interest purposes” (Article 1.1).43

    Mexico’s Law on Private Assistance Institutions for the Federal District (LIAPDF) establishes that foundations are: “moral persons that are established according to this law by means of allocation of goods of private property in order to carry out social assistance activities” (Article 2, Section V).44

    V. CORPORATIONS IN PRIVATE LAW

    Taking into account the determining influence German doctrine has stamped on this issue, we cannot elude the fact that the expression business of the foundation (Stiftungsgeschäft) which appears in German law is foreign to Mexican legal texts. However, German doctrine limits this expression to the declaration of free will aimed at creating the distinct concept of private corporations that we know as foundations. Meanwhile, entities of a corporate nature go by the name of Vereinsgründung. The terminological diversity is due to the fact that the compilers of the German Civil Code (BGB) have established the system of private corporations in terms of two concepts: corporation (Articles 21-79 of the BGB) and foundation (Articles 80-88 of the BGB). These institutions also appear in modern legislations, although not as systematically as found in German legislation.45

    On listing corporations in Article 25, the Civil Code for the Federal District (CCDF), like the Federal Civil Code (CCF), does not expressly mention private assistance institutions or foundations. However, we believe that it is admissible to incorporate associations and foundations for private assistance in Section VI of this article, as regulated by the Law on Private Assistance Institutions for the Federal District —LIAPDF— (Article 1; Article 28 of the Civil Code for the State of Guerrero —CCG—). In view of the above, the Civil Code for the State of Jalisco (CCJ), like its counterpart for the State of Oaxaca, do expressly list foundations in the catalog of corporations (Article 161, Section X, and 25, Section IV, respectively). This is an example that all the civil codes in Mexico should follow.

    In the Mexican legal system, there are then several figures that take part in the principle of associations: civil-profit associations, trade associations, civil partnerships and business corporations.46

    Foundations, that is, entireties of things (universitas rerum), can be found alongside associations, since they have the common trait of being groups of people.

    Therefore, while the principle of associations forms the basis for uniting a large number of people, with the foundational principle, it is possible to prolong over time the effects of a declaration of individual free will with contents pertaining to patrimony for the purpose of acting as requested in terms of a pre-established aim.47

    In effect, legal theory shows that:

      A legal person is any entity capable of intervening, as claimer (the holder of authority) or obligor (person held responsible for fulfilling the obligations), in a legal relationship. Legal persons are individuals or communities. The substratum (basis) of the first is man. The core of legal entities can be a group of individuals (universitas personarum) or allotted patrimony or an end (universitas bonorum).48

    1. The difference between associations and foundations

    At this point, it is fitting to refer to the differences that distinguish institutions in the form of associations from those of with characteristics of foundations:

    A. While associations and societies suggest a conglomerate of persons (universitas personarum), foundations are made up of a group of goods (universitas bonorum).

    B. If the former have their own interests, purposes and means, the latter received them from the founder, and have nothing to do with them.

    C. In terms of free will, it is external in a foundation since it is the founder’s, while it is internal in associations or societies since it comes from the association members themselves who decide on the institution structure, governance and object. Hence, it is possible to speak of an association’s (collective) free will, but not of a foundation’s free will as such.

    Therefore, it has been stated that an association is autonomous since it governs itself while a foundation is heteronymous since it is administrated by extraneous free will: the founder’s, the board of trustees’ (Article 2, LIAP) or board of directors’ (Article 2866, CCG), which translates into action through the statutes (Article 8, LIAPDF).

    D. The patrimony of associations and societies is made up of contributions or quotas from members or associates, since the interest is exclusively theirs. Meanwhile foundation patrimony is made up of the goods the founder allotted to fulfill a purpose chosen by said founder by means of a unilateral declaration of will. Furthermore, this factor has a distinct role in both institutions since it is but another resource that is merely instrumental and not necessarily essential for an association, in view that one can conceptually, think of an association with patrimony that is initially precarious or out of proportion with the purposes pursued, or even without any patrimony at all. Meanwhile, a foundation without patrimony would be contradictory since this is its most essential component, to such a degree that without it, the foundation’s purpose could not be attained.49

    E. Association organs are leading or dominant. In other words, they have wide-ranging freedom of decision, while foundation bodies are servient, that is, they are subject to the limits set forth by the founder.

    F. In the first ones, the purpose can be altered by the partners since it is internal and belongs to the entity that is established to grant advantages to its members. Conversely, in the others, the pursued interest is external to them and only has the responsibility of effecting advantages for others. Furthermore, since the purpose is imposed by the founder it is permanent and unalterable.

    G. If associations and societies pursue the private interests of their partners and associates as their distant purpose by allowing them to make use of certain goods or services (in the case of an association) or economic advantages that could be obtained while carrying out the social purpose (if a society has been formed). Foundations, on the contrary, tend to meet a public interest that is superior and generally altruistic, that cannot be confused with the founder’s personal interest, but that is limited to the interest of third parties.

    2. The difference between foundations and trusts

    Another difference we believe fitting to point out is one that arises between foundations and trusts:

    A. Foundations are regulated by the Law of Private Assistance Institutions; or else by the Civil Code, such as the Civil Code of the State of Jalisco. Meanwhile, trusts are governed by the General Law of Titles and Operations of Credit (LTOC; Articles 381-414).

    B. The legal provision that regulates foundation has a local nature while that which governs trusts is of a federal nature.

    C. Foundations are institutions of a civil nature that enjoy status as corporations and patrimony of their own. Trusts are mercantile agreements that have patrimony of their own but are not granted status as corporations.50

    D. Foundations’ purposes are aimed at social assistance by legal mandate (Article 2, Section V concerning Section I of the same article). Those of trusts can have a lucrative nature.

    E. Trusts entail the fiduciary secret (Article 118 concerning Article 46, Section XV of the Financial Institutions Law). Foundations do not have this trait.

    F. Personnel ingredients in foundations consist of: the founder, the donor(s), the foundation, that is, the corporation created, and the intermediary; the trustor, the trustee and the beneficiary. When pared down to the bare minimum, those in trusts would be the first two (Article 383, concerning Articles 381 and 382, LTOC).

    G. Foundations can establish trusts, but not vice versa. Since trusts with goods allotted for public welfare are still trusts, which is why it is not necessary to establish a foundation to do this kind of activity.

    H. Foundations can be established inter vivos and mortis causa. Trusts are the transfer of goods intervivos. In other words, they remain trusts from the moment they are created and cannot be conditioned upon death. If this were the case, it would not be a trust, but a will, nevertheless of Article 387, LTOC.

    I. In foundations, the board of trustees is the administrator and legal representative of the IAP [Private Assistance Institutions]. In trusts, both roles belong to the trustee or to the technical committee, if this should be the case.

    J. Terminating trusts by agreement between the parties is admissible (Article 392, Section V, LTOC). These grounds for termination do not exist for foundations.

    K. Foundations emanate from the unilateral declaration of free will, through which the founder allots all or part of his property to fulfill a purpose he himself determines and that, by law, focuses on social service (Article 1, LIAPDF). Meanwhile trusts are credit operations through which the trustor transfers a portion of his goods to a legal and specific purpose. It is, then, a business transaction (Article 1, in fine, LTOC; Article 75, Section XIV concerning Articles 1, 3, 9 and 45, Section X, of the Credit Institutions Law; Article 22, clause d, of the Securities Exchange Law —LMV—). Moreover, it is a fiduciary business, with which full ownership over certain rights is transferred to the trustee, “with the binding constraint of only carrying out those acts required to fulfill the purpose for which the funds were allotted”.51 Concisely, it is a fiduciary transaction that becomes a mercantile, fiduciary and financial agreement.

    L. In foundations, State intervention is only authorized to recognize and confirm —not establish— the founder’s wishes. In trusts, this intervention is directly made when the trustor is the State itself (Article 47, concerning Articles 1 and 3 of the Organic Law of the Federal Government, LOAPF), or indirectly, on granting authorization for banks, securities firms, insurance companies and surety companies to carry out the activities fitting their lines of business.

    VI. ESTABLISHMENT

    The birth of legal entities requires the presence of two factors: the existence of a substratum, that is, the existence of patrimony allotted for the pursuit of a general good and the concession of personality, which means the existence of a legal precept that gives legal capacity to said patrimony.52

    In a strictly private sphere, there are institutions that are not based on an collectivity, but on a work to be fulfilled, through an organization made up of persons and goods, placed at the disposal of the enterprise. Therefore, in foundations, the substratum is created by initiative of the person who institutes or founds the work —an autonomous one— to be carried out in the future, stipulates the purpose and its individuality, and indicates and provides the means to fulfill it. This founder also dictates the norms for its establishment and operation. This is precisely what the foundational business is about.53

    In Mexico, if several individuals wish to associate themselves to legally carry out activities that are not predominantly financial and without any intention of speculation (Article 2670, CCF), they can choose between the configuration of a civil association (AC) or a private assistance institution (IAP) —be it a foundation or association—.

    Preferences for choosing one configuration or another can be based on the fact that while the AC has flexible regulation in civil legislation (CCDF and CCF) that allows it independence and autonomy in its internal administration to a large extent, the LIAP exaggerates on inclining towards strict control.54

    In Mexico, the IAPs are regulated by a specific law on private assistance, as in the case of the Federal District and Oaxaca, or by the local civil code, as happens in some states in Mexico: Jalisco (Articles 161 et seq.), Guerrero (Articles 2814 et seq.), etc.

    According to the LIAPDF, only legal persons of private law, individuals or corporations, can establish foundations (Articles 8, paragraphs 1 and 2, regarding Article 2, II, LIAPDF); by acts inter vivos o mortis causa. In both cases, they must be formalized by means of a request presented to the Board for Private Assistance for the Federal District (Articles 8, 10 et seq.).

    In private law, the legal person we call foundation is established through two different acts: one, that of a foundation —a public ad hoc act— (Article 9, LIAPDF; Article 2864, regarding Article 2862, CCG), unilateral, perfect and valid without requiring acceptance, the content of which is the wish of the founder as the creator of the institution. This act, as pointed out before, can be recorded in public deeds or in a will, instruments that the founder uses to create the corporation. The other act is that of endowment (also unilateral), or bestowing funds, free of charge (donation, in terms of the donor) to the institution to be created. Therefore, it is an act of taking possession that specifies a set of goods allotted for a purpose and the way in which it will be managed (Articles 8, paragraph 1, Sections III-V; 9, paragraph 2 and 10, LIAPDF).55

    Both acts can be included in a same document. However, they have different natures and contents since the first is a personal right (aimed at creating a foundation) and the second is a right in rem and patrimonial (seeking to endow the future foundation with enough funding to begin operations).56

    In this sense, the foundational business needs to be made up of: a) a financial base, that is, a set of goods extracted from the founder’s patrimony to build another autonomous one; b) the basic and sufficient organization of said resources for the institution’s operations; and c) fixing the purpose to which said funds are subject. In view of the above, it is easy to think that we are viewing three businesses (acts) (endowment, organization and the establishment of a purpose), nor before two (endowment and organization for a purpose), but only before one (endowment structure according to a purpose)57 (Article 2, Section V, LIAPDF).

    A foundation can be established directly by its founder, or by third parties (executor), or by a corporation under private law (Articles 2, IV; 8, paragraphs 1 and 2, and 15, LIAPDF).

    In the penultimate law of private assistance institutions, the Committee (the decentralized administrative organ of the Public Administration for the Federal District, Article 70, LIAPDF) was able to create a foundation when the testator allotted goods without creating an institution or without naming the chosen institution (ex Articles 34 and 35 of the above penultimate law, DOF, 02-01-34). According to the new law, the executor will substitute to testator in accordance with to the testator’s wishes (Article 13, LIAPDF). Meanwhile, in these cases, the Committee can only name the institution(s) to benefit from the goods generically allotted to private assistance (Article 21, LIAPDF).

    1. Establishment during life

    In the project of the bylaws included in the application, certain aspects must be reported. Among other aspects, these include its social assistance acts, the activities the institutions must carry out to sustain itself, its initial patrimony, its administrative personnel and representatives and its permanence or non-permanent, as well as its general administrative bases (Article 8, LIAPDF).

    The Committee studies the application, makes the corresponding recommendations and, if well-grounded, authorizes its establishment. Once the statues are approved by the Committee, by means of its declaration, it issues a certified copy of said documents to be notarized and the corresponding deed is registered in the Public Registry of Property. The notary is obligated to remit an authorized copy of said document to the Committee within eight days of the granting of the deed. During that same period, the notary must also register it in the Public Registry of Property (Article 99, II and III, LIAPDF). The declaration makes the encumbrance of the goods irrevocable and creates the foundation’s legal personality (Article 9, LIAPDF, and Articles 2862 and 2864, CCG).

    2. Establishment by means of a will

    The law states that a foundation can be established in the event of a person’s death (Article 10, LIAPDF; Article 2862, CCG). When this happens, it is necessary to settle a will which declares that all or part of the goods will be directed at carrying out work of a social nature. In this case, the lack of capacity regulated by both the CCF and the CCDF in Articles 1313, Section I, and 1314 (Article 11, LIAPDF) cannot be claimed. Besides, a testamentary disposition that favor the private aid will not be able to be declared null by defect of form (Article 12, LIAPDF).

    On the other hand, upon the testator-founder’s death, testate proceedings must be filed. A notary public or authority (a judge, for example) that knows about said will must notify the Committee of it so that it is represented as the interested party in the testamentary proceedings (Articles 140, 17 and 25 referring to Articles 96 and 97, LIAPDF).

    Once the testate proceedings have been completed, if the will does not designate the institution to inherit, the Board of Directors shall have to determine the institution or institutions to receive said goods, or create a new institution if necessary (Articles 21 and 24, LIAPDF). In this case, the Board of Directors shall have to draft the bylaws and appoint the trustees (curator bonis) (Article 81, Section IV, LIAPDF; ex Article 35, LIAPDF).

    Later, the executor of the will shall present a request application and a certified copy of the will to the Committee, within thirty following natural days to the date in wich cause achierement the ruling of declaration of the heirs (Article 15, LIAPDF).

    Once the application has been presented, the Committee will compare the information with that of the will to verify that the requirements of Article 8 of the LIAPDF have been covered. If the will were remiss, the executor of the will shall provide the missing information to establish that which at a given time would have been decided by the testator. Once this has been done, it will proceed according to Article 9 of the LIAPDF (Article 15, LIAPDF).

    Before the process is finished, the law allows the heirs to hand over the goods to the institution designated by the testator or, in its absence, that one stipulated by the Committee (Article 21, LIAPDF).

    It is fitting to point out that the Board of Directors of the Committee authorizes not only a foundation’s creation, but also any modification to it or its termination (Articles 29 and 30, LIAPDF).58

    VII. ELEMENTS

    Del Vecchio himself explains that foundations consist of two essential elements: a) the personal one: the founder’s wishes; b) the real one: the patrimony aimed at the pursuit of the purpose. Further ahead, he states: “in the case of foundations, the personal element seems to be considered less important when the real element predominates”.59

    It has been stated that all foundations necessarily require the presence of three kinds of persons: a) the founder who will play the role of the donor; b) the donee who will be the work to be founded; and c) the intermediary, the person who serves to tie everything together and be the linking factor (executor of the will).60

    Of the concepts provided by doctrine and legislation, we can surmise the traits that characterize the institution under study.

    They are a purpose, on one hand, and patrimony, on the other, in addition to a corporation with an organ for carrying out the actions. All of these are presumed existing in a functional organization.

    If these elements are enough for establishments to exist in fact, so that they become capable, legally speaking, they require legal authorization that will allow them to incorporate themselves into a certain legal system.

    In effect, current legislation recognizes as a principle of public law: that, for every kind of institutions, associations or foundations of public utility (Article 4, LIAP) the State has the right of authorization, surveillance over them (Article 71, LIAP) and of extinction (Article 81, IV, LIAP).61

    1. Purpose

    According to Mexican law, foundations cannot have just any purpose since legislators have decisively established that said foundations shall consist of acts of social assistance (Articles 2, V, in fine; 1 in fine). That is so:

      Actions aimed at providing assistance, social integration and the healthy development of individuals or groups of the vulnerable population, or groups at risk, due to their condition of disadvantage, abandonment or physical, mental, legal or social lack of protection. As well as actions aimed at facing emergency situations, strengthening their capacity to solve problems of need, exercising their rights and, if possible, ensuring their return to their family, work and social circles. Social assistance encompasses actions of promotion, prevision, prevention, protection and rehabilitation (Article 2, LIAPDF).

    The General Health Law (Article 167) is written in similar terms. Although the law is not explicit, it evidently deals with legal purposes (cfr., in the case of trusts, Article 381 of the General Law of Negotiable Instruments and Credit Operations, or Article 25, VI, CCDF); non-profit purposes, without benefiting certain individuals (Article 1, in fine, LIAPDF), but with the precise designation of the acts of social assistance that need to be carried out (Article 8, III, LIAPDF).

    Other legislations, such as that of Spain, points out that:

      Foundations must pursue purposes of general interest: assistance of a social, civic, educational, cultural, scientific, athletic or health nature, of cooperation for development, to protect the environment or stimulate the economy or for research, promoting volunteer activities, or of any other analogous nature (Article 2, Law of Foundations...).

    2. Patrimony

    This is about a set of goods or rights that are irrevocably encumbered to carry out these acts of assistance, which in turn are itemized in detail. This must be recorded in the bylaws and in the foundation’s foundational deed (Articles 8, V; 6, paragraphs 1 and 2; 9, paragraph 3; LIAPDF). Said goods can be handed over as donations, inheritances or legacies (Articles 24-28, LIAPDF).

    The law contemplates exceptions to its irrevocability when the public administration of the Federal District uses the material and financial goods that belong to private assistance institutions or when it celebrates any contract involving said goods, replacing the board of trustees of said institutions. In this case, the founders will have the right to dispose of the goods they allot to the institutions during their lifetime; or establish in their will that the goods will be passed on to their heirs if said breach took place (Article 6, paragraph 2, LIAPDF). Another exception is one that allows the reduction of the donations, when they jeopardize the donor’s obligation to supply food to those stipulated by law, in the proportion stipulated by the competent judge (Article 28, LIAPDF).

    The irrevocability of said encumbrances should not be confused or given priority above the unrestricted revocability of the will that would have instituted the establishment of a foundation (Articles 1295 and 1493-1495 of the Civil Code of the Federal District, and ex Article 113, LIAPDF).62 However, the CC of Guerrero stipulates that if the will were declared null, the establishment of the foundation would be valid (Article 2865). Meanwhile, the LIAPDF states that “a provision in a will shall never be declared null due to flaws in form when the will is made in favor of private assistance” (Article 12).

    Furthermore, endowment can be by means of a single act or successive ones (Article 8, LIAPDF). In the case of the latter, legislators do not indicate the maximum term in which the initial contribution must be made, nor does it indicate a minimum amount.

    The Committee’s authorization is required to dispose of and encumber the goods or rights of the testamentary succession that are to form part of the foundation’s patrimony. Likewise, the Board of Directors shall act when donations, inheritances or legacies are allotted to private assistance in general. Moreover, said organ shall authorize the donations to institutions if said donations are onerous or conditional. In all other cases, the Committee needs to be informed of all the donations foundations receive (Article 26, paragraphs 3, 1 and 2, LIAPDF, respectively).

    On the other hand, the Committee must be informed of all the investments the foundations might make and not only those that regarding the acquisition of transferable fixed income securities as specifically regulated by the LIAPDF (Article 64). The Board of Directors itself is authorized to approve the transfer of material and financial resources between institutions (Article 66, paragraph 2, LIAPDF).

    3. Government organs

      Founders and Board of Trustees

    The law defines founders as “the persons who assign all or part of their goods to establish one or more institutions of private assistance” (Article 2, Section VIII, LIAPDF; Article 63 of the Law of Private Institutions of Assistance, Human Advancement and Social Development in the State of Oaxaca, LIAP-Oax).

    The board of trustees (patronage) (a group of trustees of institutions of private assistance, ex Article 47 of the penultimate LIAP; Article 64, LIAP-Oax) is a collegiate organ headed by the founder as its president, who determines the course of the institution (Article 41, IV, LIAPDF).

    The board of trustees is “the administrative organ and the legal representation of a private assistance institution” (Article 2, VI, LIAPDDF). Moreover, said organ is a key part of the foundation on becoming the organ that administrates, advises and gives technical support and control. Meanwhile, the trustees are “the people that make up the administrative organ and the legal representation of private institutions” (Article 2, VII, LIAPDF).

    According to law, the board of trustees “must be formed of at least five members, except when put in motion by the founder himself” (Article 8, VI, in fine LIAPDF). This means that founders can also act as trustees. Furthermore, the bylaws establish the procedure for replacing trustees.

    This means that when the founder himself heads the board of trustees, the board may not be collegiate, and therefore, the founder himself will be the legal representative and sole administrator of the private assistance institution.

    Furthermore, the LIAPDF does not stipulate how the positions are to be allocated in the case of a collegiate board of trustees. It is supposed that one trustee will act as president, another will be the administrator, a third will hold the position of legal representative, yet another will function as executive secretary and a fifth will act as the commissioner of said board of directors.

    On the other hand, the board of trustees can appoint subordinate assistant organs: general directors, treasurers, and so on, according to the institution’s needs.

    The law on this matter states that the trustees must be stipulated in the bylaws (Article 8, VI, LIAPDF). In Chapter VI of said provision, the representation and administration of private assistance institutions is regulated. It states the power of the founder or the Board of Directors of the Committee, if the case, to name or replace trustees (Articles 41, II; 42, I; 42, II; 44, LIAPDF, respectively). A specific provision indicates the attributes and obligations of the trustees (Article 45, LIAPDF), as well as who cannot perform said position, like public servants, legal persons or people who have been ousted from another board of trustees (Article 43, LIAPDF). Furthermore, it clearly states that, in the exercise of their functions, trustees are not individually obligated, but are subject to the civic and penal responsibilities they might incur (Article 46, LIAPDF). However, this law is not precise, since it vaguely includes the possibility of resigning the position of trustee... “when the appointed persons... leave the institution” (Article 42, II, clause c).

    Further ahead, Article 45 details the attributes and obligations of board of trustees (Article 45, LIAPDF). Among others, there is that of administrating the institutions’ goods, carrying out actions, protecting said institutions, etc.

    Regarding the foundation’s administration, it is important to highlight the important role the Board of Directors of the Committee has in approving income, expense and investment budgets for the fixed assets and any modifications; in establishing work programs and in carrying out financial transactions, such as loans, mortgages, leases or real estate and goods and chattels, etc. (Articles 49-69, LIAPDF).

    The financial information must be regularly presented to the Committee, as well as a list of donations received (Article 26, paragraph 2, in reference to Articles 49 and 57, LIAPDF).

    In addition to the activities of assistance rising out of their corporate purpose, foundations can, through boards of trustees, dedicate themselves to ensure the operations of institutions by providing funds, such as granting loans through mortgage guaranty, acquire transferable fixed income securities, invest in building homes, housing complexes and condominiums; according to the rules and limits established in the foundation’s provisions (Article 8, Section IV; 45, Section II; 63 et seq., LIAPDF).

    The law also states the way of raising funds by organizing festivals, tombolas, raffles, collections, etc., on the condition that said funds are entirely destined to assist in the fulfillment of the foundation’s statutory object (Article 67, LIAPDF).

    On the other hand, foundations that show surplus can finance —with the Board’s authorization— their homologous in precarious situations (Article 66, LIAPDF).

    In this section, we must not forget to include what has already been said about the constitutional prohibition of acquiring more real estate than that needed to fulfill its institutional objective (Article 27, III, of the Constitution).

    VIII. CLASSIFICATION

    According to the law, foundations can be provisional or permanent (Article 10, LIAPDF; 3, LIAP-Oax). Furthermore, they can be established by inter vivos or mortis causa transactions (Article 8, in reference to Article 10, LIAPDF; Articles 35-39 and 40-57, LIAP-Oax).

    In its 2000 directory, the Mexican Center for Philanthropy (Cemefi) has 5,000 altruistic institutions registered, though not all of them are affiliated to said body. This catalog uses two criteria to classify said organizations: by the type of people they serve, that is, children, youth, women and the elderly; by the action fields in which they do their work: art, science, technology, development, ecology, well-being, human rights, education and healthcare.

    Furthermore, the Income Tax Law (LIR) makes reference to the foundation that economically supports other institutions: “Foundations, boards of trustees and other institutions whose purpose is to financially sustain another institution” (Article 96, LISR).

    IX. LEGAL NATURE

    The explanation of this important aspect has given way to an interesting debate, which has gone interrupted since January 1, 1900, the date marking the entry into force of the German Civil Code, the legal body that provided us with complete regulations on corporations.63

    In presenting the Civil Code’s reasons, German legislators have stated that: when the right grants an individual the enormous power implied in devoting an endowment of goods for a specific purpose for an indefinite term, it is confirmed in the benefits and in promoting the purposes that serve society at large.64

    How should foundations be considered? It is a comprehensive question since it allows one to apply the theories outlined by doctrine to explain legal persons in general. This study, due to its sheer size (its ontological, moral and legal aspects), exceeds the limits of this essay. At this time, we have only limited ourselves to the opinion that —to us— applies to the concept of foundations (Stiftungen).

    In effect, various theories have tried to explain this transcendental aspect: the contractual one (Rosshirt, Brinz, Pfeifer...); the patrimonialist one (Windscheid, Brinz, Pachioni, Duguit, Barrera Graf...); those that consider the purpose the foundation’s basis (Savigny); the State one (Mirabeau, Chapelier, Stein, Giorgi...) or that of the recipients (Ihering, Planiol, Michoud...); that of the founder’s objectified will (Zitelmann, Miraglia, Gierke, Behrend...); that of the organization (Enneccerus, Cosack...); and that of self-commitment (Siegel, Behred, Lacour et Bouteron, Coviello, Messineo, Borja Soriano, Rojina Villegas, Sánchez Medal...), among others.

    It is fitting to point out that legal tradition has not brought about the binding effect of unilateral declarations. In effect, an individual’s simple promise does not have binding force in Roman law, except in two clearly identified cases: pollicitatio (a promise made to a municipality as a result of an honor received or in virtue of another just cause) and the votum (a unilateral promise in favor of a divinity or intended for a pious purpose). This rule was so deeply engrained in intermediate right that the exceptions began to disappear. However, differing opinions were raised (Grocio, Fabre...) for defending the effectiveness of unilateral declarations. But in the end, the crushing presence of the concursus voluntarum was imposed in legislations until Siegel brings them up for debate once again in the later half of the 19th century (1873).65

    To this regard, two theories took the floor: the affirmative one (Siegel, Worns) with two tendencies: the broad or radical one that based on the fact that unilateral wishes are the only source of the obligations and the moderate one that acknowledges the effectiveness of a sole unilateral promise and exclusively in cases in which the interests of commerce so require it (Geny, Baudry-Lacantinerie, von Thuhr). For example, negotiable instruments payable to order or to the bearer, promises of foundation and reward, contract offers... The negative one (Pothier, Planiol, Ripert, Scialoja) definitively does not admit the theory of the binding force of the unilateral declaration of will at all.66

    While it is true that the opinion that upholds unilateral declarations as the sole source of obligations goes too far, it is not sound criteria that it admits to explain the rare assumptions created for the purpose of channeling market interests, fomenting social solidarity, etc., which requires its embodiment in several laws. That is how the German Civil Code understood it (offer of contract directed to a third party, Articles 130 and 145, offer of formal promise to pay a reward, Article 657), the Swiss Civil Code (Articles 3, 5 and 8 review of obligations), the Brazilian Civil Code of 1916 (negotiable instruments payable to the bearer and formal promise to pay a reward, Articles 1512-1517), the Peruvian Civil Code (offer of formal promise to pay a reward, of competition, of a bid process, Articles 1959 et seq.), the Mexican Civil Code (offers to the public: of sale, Article 1860, in reference to Articles 1804 and 1805; of formal promise to pay a reward, Articles 1861-1865; of competition with formal promise to pay a reward, Articles 1866 and 1867; of clause in favor of third party beneficiary, Articles 1868-1872; the negotiable instruments governed by the LTOC, Article 71) and the Italian Civil Code (negotiable instruments, Articles 1992-2027) and the corresponding negotiable instruments laws; public promise, Articles 1989-1991; promise of payment and debt recognition, Article 1988; the act of foundation).67

    Therefore, the theory of self-commitment (Selbstbindung) is a suggestive theory that in our opinion seems the most fitting to explain the legal nature of foundations. We will thus discuss that here.

    It should be pointed out that the first structures that attempted to reduce the foundation business to an act of a patrimonial nature considered the manifestation of an individual’s (founder’s) desires as the constituent element of a bilateral business.68

    While Roth69 asseverates that foundations are not bilateral businesses, in which the State intervenes as the contracting party on behalf of the foundation to be created, but operate as a creating element in law from which special laws arise.

    The principal merit of this unilateral structure that makes indubitable progress and that is admitted by both German legal scholars (Eneccerus)70 and Italian legal scholars (Ferrara)71 was that it opened the path towards the appraisal of the founder’s desires. Its main development is ultimately found in the theory of creation (Kuntze).72

    In foundations, the act of disposition of patrimony is part of the business that together with other elements form an inseparable whole. Together, these elements specifically form the business of foundations (Stiftungsgeschäft). It would not therefore be legal to separate the constitutive parts of a business or even treat one separately from the others.73

    Jellineck and Behrend74 have assevered that private law establishes the provision that validates human desires and more specifically the one that assesses the individuals’ wishes.

    German doctrine has attempted to show the existence of two fundamental kinds or forms by which private wishes, aimed at producing legal effects, have legal consequence. Governing the entire formation of any legal system these basic forms are found in the establishment of individual institutions under private law. They are “according to Behrend” the self-commitment (Selbsbindung) and the commitment before the will of others (die Bindung gegenüber freirndem Willen). Thus, an individual can self-commit his wishes or tie it in with the will of another.75

    In his famous work, The Promise as a Source of Obligations, Siegel showed that a promise made unilaterally —the unaccepted word (das nicht empfangene Wart)— resulted in legal consequences for its author. Siegel’s conception had so much influence that on reviewing many doctrine structures, several legal scholars applied it to many legal institutions, such as negotiable instruments.76

    On not furthering developing his idea, Siegel practically gave this merit to Behrend. This author, as said above, established two basic forms for expressing personal desires. These appear in certain legal institutions and are about —in Behrend’s own words— commercium inter vivos and commercium mortis causa.77

    In such virtue, foundations are found in the category of unilateral businesses78 of self-commitment.79 The content of said act is shaped by the founder, who decides on the purpose, provides the patrimony and determines the administration. The individual’s desires, expressed and stated as such, immediately become irrevocable (Article 16 in fine in reference to Articles 6 and 9, LIAPDF). This is evident in foundations mortis causa, in which upon the death of the de cujus (testator) any freedom of disposition ends and the heirs have no possibility for its revocation.80

    Before the death of the de cuius, the foundation’s revocability, by the founder, comes from the principles of inheritance law, which cannot completely be dispensed with because, as said before, these are the technical means offered by the law.81

    Furthermore, in foundations inter vivos, this is specifically verified. A public act is required by the Mexican legal system (Article 9, LIAPDF). Expressed as an individual’s (founder’s) desire —according to law— it becomes irrevocable and remains committed (Article 6, in reference to Article 9, paragraph 3, and Article 16 in fine, LIAPDF).

    Thus, in the business of private foundations, there are all of those characteristics that Behrend has itemized for unilateral legal businesses of self-commitment.

    These characteristics are: a) the indetermination of the recipients; b) the complexity of the structures, for which public structures or the participation of public authorities are needed; c) these, frequently, but not always, bide their time to perfect the business link.82

    There is no doubt about such requirements, in which, as said before, the form of a public act is always required for foundations inter vivos, and the desire so expressed must be irrevocably committed.83

    Thus, according to Scialoja,84 for the unilateral mandatory declaration to be verified, the contents of the business must be elaborated by the obligor, in such a way that its complete efficiency is based on the strength of his desire and for legal provisions to intervene, solely for recognition and approval of said efficiency.

    Based on these considerations, how much of the legal nature of the foundation business (act) has been affirmed in private law cannot be completely refuted. In effect, the founder sets up its contents, while State intervention, as will be seen, only has the power to recognize and confirm (Konfirmatorischen) (not to constitute —konstitutiven—) the founder’s desires.85

    Scialoja himself explains: an obligation arises from unilateral desire, when the commitment with its content determined by the obligor’s desires attains its full legal efficiency without contest from other desires (and in kind, without the obligee’s desires). Hence, at the onset of this affiliation, the law should only intervene to recognize and approve the result of the human act of the desire, as it generally does for any legal private interest business.86

    Reflecting on the topic, Baudry-Lacantinerie, the French classical iuscivilista legal scholar, accepted the declaration of unilateral will as the source of obligations since he considered it the only reasonable way of explaining “a certain number of valid obligations” like those arising from wills, promises of rewards, negotiable instruments payable to the bearer, etc. Furthermore, he justified the idea that the obligor’s desires in contractual obligation establish the obligation, since the other party determines whether to accept it and enjoy its benefits. A question should be posed at this time: why is it not possible for that same, clearly expressed desire be validly assumed, before the future beneficiary of that obligation accepts the offer since the only effect of the acceptance is to make the offer irrevocable? It is argued that any obligation presupposes an obligor and that in the mentioned theories there is no definite obligee that benefits from it at the time of undertaking the obligation. But, he adds, it does not matter, because for an obligation to arise, the only requisite is that there be the sufficient elements to specify the obligee in the future in the legal act that creates it, regardless of the obligor’s desire. This is the hypothetical case under study.87

    Josserand declares himself in favor of this, clearly explaining that the desire in itself confers obligatory strength in only a few cases. That is, a person can be both the obligee and the obligor, by means of the unilateral expression of a desire. This should not surprise us since legal studies have determined that property itself can be obtained through this concept. A clear example of this is occupation, that is, taking cognizant possession of the chattels (bona mobilia). Therefore, if we can take possession of things without negotiating an agreement, there is no reason to be amazed that sometimes we become obligors or obligees through a spontaneous decision and individual initiative. Thus, “not all contracts are legal acts. Underneath them, there are acts of unilateral creation that, like the former, tend toward the creation of mandatory relationships and that, also like the formers, effectively attain that goal”.88

    Doctrine also states that legal businesses, considering the elements that give them life, can be classified as unilateral and bilateral.

    The unilateral ones are:

      Those in which the desire of a single party is enough to bring about legal consequences. We say a party and not persons since a party can be represented by one or more people: a party is the person or group of persons that work for the same individual interests. Therefore, it is the only one, if the interest is the only one, and two, if there are two interests. As a result, even the expression of several people’s desires is a unilateral act if they have a single interest, such as several owners’ surrender of the common object.89

    In terms of Mexican doctrine, Barrera Graf joins the patrimonialist school of thought by categorically stating: “since in [Mexican] law it is fitting to attribute legal personality and constitute separate patrimony and encumbrances, in the case of foundations”.90

    The supporters of this opinion state that:

      The concept of encumbrance equivalent to destination that [Mexican] law uses, be it according to French doctrine as presented by Lepaulle and Planiol, or Mexican doctrine as the interpretation of the laws of private assistance and charity, have their true content in the transfer of property, or better said, of ownership, since not all goods subject to a trust are subject to property. According to Planiol, encumbering goods consists of bestowing them to a legal person other than that of the benefactor, according to French doctrine and according to laws of charity and assistance. Allocating goods to a lawful and stipulated purpose, such as the creation of a foundation, which is also described as encumbering said goods, is equivalent to transferring property, the founder’s property of the goods, to the foundation as a legal person other than the founder’s.91

    This is the legal nature that is set forth in Article 2, Section V of the LIAPDF; Article 190, CCJ; Article 2 of the Law of Institutions... of Oaxaca; Article 11 of the Public Charity Law of Oaxaca; Article 2861 of the CC of Guerrero.

    Foundations, states Sánchez Medal,92 come to have legal life by a unilateral declaration of will. Therefore, there is no substratum of the alliance of individuals as partners that make up a charity institution. Thus, the legal entity of a foundation comes from a body made up of three elements: a charitable end, with precise purpose of the activities to be carried out, but without any intention of profit or specifically naming the beneficiaries; patrimony irrevocably destined for carrying out acts of charity; and a board of trustees (Article 8, Sections II, III, V and VI, LIAPDF).

    As mentioned above, the unilateral declaration of free will is —entre nous— a legal source of civil and mercantile obligations, even though there are no uniform criteria in doctrine regarding its efficiency.

    Renowned Mexican authorities in civil law Borja Soriano and Rojina Villegas agree on the unilateral expression of will as a source of obligations, but they differ in that the first is accepted as numerus clauses. That is, only those expressly included in the Civil Code are recognized. Meanwhile the second pronounces himself in favor of the numerus apertus, that is, for him, the list in the Code only furnishes examples since there is the legal possibility of creating unspecified expressions of will, like: the free offer to an unspecified person, the act of free unilateral encumbrance and the abstract promise, or as happens implicitly with negotiable instruments.93 The legal bases Rojina uses to back his thesis lie in Article 1859 of the Federal Civil Code and in the Civil Code for the Federal District: “The legal provisions on contracts shall apply to all the agreements and other legal acts, as long as they do not oppose the nature of these or special legal provisions on the same”.

    This author states that since the Private Assistance Law for the Federal District and Territories stipulated that these two forms (the promise of a foundation or the its establishment, can be carried out during the founder’s lifetime or by will, Article 21) arise from a unilateral act.94

    The Civil Code of the State of Morelos clearly sets down the thesis of the unilateral expression of desire as the general source of obligations (Articles 1274-1311), since Rojina Villegas left his personal mark on that norm.

    Various principles are embodied in it, as well as the different types of unilateral declarations of free will:

      Article 1274. Unilateral declaration of free will and an autonomous source of obligations. The unilateral declaration of free will is recognized by this Code as an autonomous source of obligations, except in those cases expressly exempted in this chapter. Consequently, any capable person can create obligations through a simple declaration of will, as long as it is a legal and possible obligation.

      Article 1275. Application of provisions on legal acts and contracts. The rules established by this Code for legal acts in general and for contracts apply to the unilateral declaration of free will, except in the cases expressly stated in this chapter.

      Article 1276. Forms of unilateral declarations of free will. Recognized as general forms of unilateral declarations of free will are acts of free unilateral encumbrance, the free offer to an unspecified person and the abstract promise of debt.

    This code specifically governs the act of free unilateral encumbrance (Articles 1277-1281), the offer to a stipulated person (Articles 1282-1287), the abstract promise of debt (Articles 1288-1296), the offer to a stipulated person (Article 1297), the offer of sale (Article 1298), the promise of reward (Articles 1299-1303), and issuing documents payable to order and to the bearer (Articles 1304-1311).

    It is considered that accepting an inheritance is also a unilateral declaration of will (Articles 1656 and 1670 of the Civil Code for the Federal District).95

    In the mercantile field, specifically in the area of currency exchange, legislators disclose the theory of marras: that is, “creating the bill of exchange —unilateral legal act—, the act of adding a signature —also a unilateral legal act— is the source of the obligation”.96

    Then, the right of the bearer arises, simply, from the obligation the subscriber assumes with it, by creating the instrument, stating his desire to dispose of a part of his patrimony in favor of said bearer. Upon drafting and signing the title, the subscriber effects a unilateral promise the efficiency of which is conditioned on the fact that a third party comes into possession of the instrument. Until that moment, the subscriber could, destroying the instrument, eliminate the origin of his obligation. However, once the document has been placed in circulation, the promise contained in it becomes irrevocable, directly linking the subscriber with any holder of the instrument. Therefore, the genesis of the subscriber’s obligation with negotiable instruments comes about with the creation of the document and not by celebrating the underlying contract.97

    Article 228M of the LTOC clearly orders that “issuance [of the certificates of participation] shall be done before the issuer’s unilateral declaration of free will, expressed in a public instrument...” and all the rights and obligations, modalities, etc., are regulated by Articles 228A and 228B. The same occurs with the obligations issued by corporations (Article 213, LTOC), bank bonds (Articles 63, 106, Sections XV, bis 1 and XV bis 2 of the Financial Institutions Law) and any other negotiable instruments.

    The foundation business –we know – is not, then, an issue of inheritance or legacy, nor of a donation, but a business that, examined, by and in itself and based on the purpose proposed (social assistance), assumes a characteristic figure that gives it its own contents and autonomy.98

    Unfortunately, we have not found a ruling from Mexican courts on this matter. We think it is important for guidelines to be indicated, whether to uphold the thesis of the unilateral declaration of free will or to argue in favor of another opinion.

    1. State intervention in the business of private foundations

    When the State intervenes in foundations inter vivos or mortis causa it faces an individual’s manifestation of will that is irrevocably determined in the contents of the business. A purpose has been established, patrimony has been arranged, and the provisions on its administration have been drafted, in such a way that the intervention of State’s will does or can not have any influence whatsoever. It is about relationships between individuals that do not affect the State’s legal patrimony.99

    On examining the influence exerted by the intervention of the State’s desires, the moment private foundations come into being, we can perceive that it does not touch the contents of the relationship at all, in terms of the legal limits. It is solely and exclusively set by the individual’s desire in such a way that it only refers to the whether (conditional —auf das Obcondicio iuris) of the legal effects, which is aimed at rescinding the business’s efficiency.100 Hence, State’s desire is only concerned with the requirement of efficiency.

    Since the concept of requirement of efficiency does still not exist at the time of the business’s termination, it is then identified with that of condicio iuris, in such a way that it can be assevered that the State’s desire is precisely a condicio iuris of the business’s efficiency.101

    Since the State’s desire is limited to making possible the legal effects arising from the individual, it therefore does not constitute benefits for these or new powers or rights. Nor does it have influence in the exercise of rights (which have already been exercised by the rest, once the act is issued) or broaden the space of the individual’s legal possibilities.102 This excludes the fact that the State’s act must be placed among essential or innovating ones.

    Along this same line of thought, the State’s act should be placed among the acts of verification. By means of a trial aimed at proving the conditions established by law and the requirements through which the individual’s desires have been determined, the State makes it possible to have the business’s effects. In other words, it comes to determine only a legal situation in the scope of an already existing relationship.103

    Karlowa adopts an eclectic position in stating that State recognition have not of a essential or declaratory nature, but one of ratification. This means that when the law recognizes a person, it confirms the existence of prior legal reality. Therefore, once the confirmation has been made, the acts carried out previously by the collective entity are validated. When corporations and foundations are created, both individuals and the State cooperate. The former, through an autonomous act of establishment or foundation; the second, by means of an accessory act of ratification (Bestätiogung).104 We are faced with an inserted act that complements efficiency; a stamp of legality like the marks on currency, according to Auriti.105

    According to the above, it can be concluded that the emergence of private foundations is the exclusive work of the desires of individuals and that the intervention of the State’s volition do not seek anything other than to confirm the existence of conditions so that private volition can produce the legal effects as desired by the founder.106

    2. Legal personality

    Since human groups are established to reach common goals by means of their members’ collaboration, it can be said that, by analogy, they participate in the concept of person. In society, as Donald Pierson points out, there are characteristic notes of consensuses, solidarity, joint actions, group positions and functions, an arrangement among individuals through understanding and shared feelings, for the purpose of developing legal personalities and acting together in fulfilling common goals.107

    Along this line of thought, corporations and foundations exist to allow human beings fully develop their potential. Thus, they are rooted in basic human purposes. To this regard, Johannes Messner teaches that the society’s natural structure, in its entirety, encompasses social pluralism and therefore, smaller communities and societies that have their roots in basic human purposes, are endowed with traits of dignity and self-liberty typical of human beings.108

    Said characteristic traits allow societies to be considered as persons by analogy. Of course, foundations share this idea. They establish institutions that are ultimately rooted in social life. These same fundaments that justify the attribution of legal personality to societies should prevail for foundations. Karl Larenz categorically states: if the legal provision grants foundations legal capacity, treating it as subject to law, just as it does with individuals, it is based on an analogy according to which the founder’s desires are carried out by establishing the foundation, and updated again and again by the activities of the organs that fulfill said desires. Therefore, in this case, like in that of an association, unity of acting can be found in the sense of an objective/intangible and sociological reality.109

    Meanwhile, García Máynez says that: “subject to law is any body capable of intervening as claimer or obligor, in a legal relationship”. He adds: those subject to law are individuals or communities. Substratum of the first is man. The fabric of the legal entity can be a group of individuals (universitas personarum), or encumbered or designated patrimony (universitas bonorum). The types of legal entities are a matter included among fundamental legal concepts. Foundations are therefore a logical and fundamental legal concept.110

    Ferrara also understands that personality is a legal category, a legal form of unifying relations. Objective law recognizes the personality of the association of individuals that gather in the pursuit of common goals. Societies come to have, therefore, a different personality from the elements that make it up.111

    These communities are made up of individuals that aim at reaching common purposes. On being granted personality, law unifies their acts and favors their development and growth.

    What happens with foundations is no different. Law considers them legal entities to unify the activities in terms of the services for which they were established by the founder.

    Now, legal personality is not granted by the founder’s act nor even by being granted a public deed nor by registry in the Public Property Registry, but ex lege, when the Federal District Private Assistance Committee has approved its establishment and bylaws (Article 9, in particular the last paragraph of the LIAPDF, regarding Articles 25, VI; 1668, paragraph 1, and 2687, CCDF).

    X. MODIFICATION AND TERMINATION OF PATRIMONY

    In the case of any modification, the boards of trustees will present the proposal to the Board of Directors, who will decide on it (Article 29, LIAPDF; Articles 89 and 90, LIAP-Oax).

    Termination could take place through a Board of Directors directive. The termination procedure could begin ex oficio by the Board or at the request of the corresponding board of trustees due to causes such as the impossibility of fulfilling its social goals or because said goal has been achieved, etc. (Article 30, LIAPDF; Article 94, LIAP-Oax).

    Once the Board of Directors decides on the foundation’s termination, it will order its liquidation, name one liquidator for the board of trustees and another for the Committee. It will establish the liquidators’’ fees, which will be covered by funds from the extinct institution (Articles 33-35, LIAPDF). There are seven requirements to be a liquidator and many powers and obligations are assigned to them by law (Articles 36 and 37, LIAPDF).

    Thus, when a foundation becomes extinct, its goods will be allotted to that determined by the founder. In absence of this, the remaining resources shall go to the institution(s) named by the Board of Directors, preferably to one with similar aims (Article 39, LIAPDF; Article 207, CC. de Jalisco; Article 2569, CC. de Oaxaca; Article 103, LIAP-Oax). If there are none, they will be used for general charity purposes. If the State attempts to take power of those goods or allot them for another purpose, then the right of reversion is applied and all the goods are returned to the founder or his heirs (Article 6, paragraph 2, LIAPDF).

    XI. CONTROL SYSTEM FOR FOUNDATIONS

    Once termination has been determined by the Board of Directors, it will order its liquidation, name the liquidators and if anything remains of the liquidation, it will order it to be transferred to another foundation with a purpose similar to that of the extinct one, excepting that stipulated by the founder (Articles 33 and 39, LIAPDF; 92 et seq., LIAP-Oax).

    The Committee is a organ with the faculty to watch over, advise and coordinate private assistance institutions (Article 71, LIAPDF).

    It has various attributes and obligations, such as: to advocate any kind of incentives before the authorities, represent and defend the interests of the institutions, keep a record of them, etc. (Article 72, LIAPDF).

    The president and the Board of Directors make up the Committee (Article 73, LIAPDF). The Board consists of a president, a secretary and twelve voting members (Article 74, LIAPDF).

    The president is its legal representative, appointed by the Federal District chief executive, chosen from a slate of three candidates presented by the Board of Directors, as long as he fulfills the requirements stipulated by law (Article 79, LIAPDF). He holds that position for three years, after which he cannot be re-elected, although he can be removed at any time (Article 76 LIAPDF). He has the obligations and attributes set forth in Article 82, such as developing the organization’s manuals and Committee procedures, presenting them to the Board of Directors, calling to meetings, representing the Committee, executing agreements, etc.

    The Board of Directors holds meetings at least once a month and it convenes upon being summoned by the president or three board members. At least half plus one of those present must attend at the first summons. For the second summons, those present are enough. Decisions require a majority vote, unless the law requires a qualified majority. The president has the deciding vote (Article 75, LIAPDF).

    The Board of Director’s obligations and attributes include: proposing private assistance policies; defining priorities; developing and approving the rules for its internal operation; authorizing the creation, transformation, fusion or extinction of the institutions, as well as their by-laws and any amendments; approving the Committee’s and the institutions’ work reports; and establishing an IAP registry; among others (Article 81, LIAPDF).

    XII. COMMITTEE POWERS

    The importance of this organ is evident in the LIAPDF, which dedicates seventeen precepts to it. It deals with a “decentralized [by functions] administrative organ of the Federal District Public Administration, with technical and operating autonomy, hierarchically subordinate to the chief executive of the Federal District”. Its main task is that of watching over and controlling supervising the activities of IAPs (Article 72, LIAPDF). This mission is carried out through inspection visits regulated by the same law in Articles 88 and 89.

    XIII. THE INTERVENTION OF NOTARIES AND JUDGES

    The law stipulates certain obligations for these public officials so that they participate in protecting private assistance.

    Notaries, for examples, should have written authorization from the Committee to be able to the notarize legal acts involving IAPs; notify the Committee of the existence of any open public will with indications given to establish an IAP, as well as when a will involving private assistance is revoked by submitting the corresponding documentation (Article 99, LIAPF).

    Moreover, judges in the Federal District must notify the Committee of the probate hearing to determine the heirs or legatees of a decedent that affect the interests of private assistance (Article 100, LIAPDF). It can be assumed that this provision extends to the members of the Mexican consular staff with notarial powers; as well as to criminal judges when legal proceedings can jeopardize an IAP (ex-Articles 114 and 118, LIAPDF).

    XIV. TAX SYSTEM FOR FOUNDATIONS112

    First of all, we can point out that this system benefits IAPs in two ways: they are exempt from the obligation of paying income tax since they are considered non-taxpaying entities; and it empowers them to issue tax deductible receipts to their donors by considering them authorized beneficiaries.

    1. Income tax exemption and authorization to issue receipts

    For a foundation to take advantage of these two legal advantages, its social purpose should be aimed at carrying out certain activities, such as formal education, health, promoting Fine Arts, environmental awareness, scientific and technological research, attending people with low incomes, among which the care of children, the elderly and the disabled,113 drug addicts or social rehabilitation (regarding exclusion, Article 93 related to Article 95, Sections VI, XII, XIX and XX, LISR). They are not exempt from paying taxes on the income received from the transfer of their goods, on income from interests, or on income obtained from prizes (Article 94, LISR).

    In addition to these activities, there are others that overlook the LISR, the same ones that some foundations fulfill nowadays, like promoting human rights, and a very broad scope of educational and cultural activities that legislators should include in future amendments to exempt them.

    In the LISR there are three kinds of authorizations for issuing deductible receipts. The first is for foundations and other institutions that economically support other institutions. These institutions are limited to granting donations only to those institutions that run direct programs and that are authorized by the Department of Treasury to receive said donations (Article 96, LISR).

    In second place are the donees that run direct programs according to Article 97, LISR, when they comply with certain requirements that show that their funds are used for altruistic ends.

    In view of this, the articles of incorporation or bylaws must include clauses regarding:

    • That the social purpose shall not be for profit.

    • That the distributable residual, that is, the profits, cannot be distributed among foundation members (Article 97, Section III, LISR).

    • That in the event of the foundation’s liquidation, all of its patrimony shall be given to donee institutions authorized to receive deductible donations (Article 97, Section IV).

    Furthermore, the authorized donees: cannot receive excessively large amounts of income from rents, interests, dividends or royalties, or for activities that are not implied in its social purpose (Article 97, Section I, LISR). They cannot participate in activities that are political, for propaganda purposes or aimed at influencing legislation (Article 97, Section II, LISR); and can only allot 5% of its annual income to cover administrative costs. This is in order to have the funds allotted to the purposes for which they were established (Article 14-C, RISR). Moreover, donees must issue numbered receipts with the information referred to in Article 40 of the Federal Tax Code Regulations (Article 14-C, last paragraph).

    It is fitting to point out that according to law, administrative costs cannot exceed 25% of the amount of benefits. This percentage was established in the new law of 1998, which was a legislative success, since the previous provision set the cap at the [total] amount of benefits (ex-Article 58, LIAPDF) which was very dangerous. This reform was possibly taken from Article 73 of the Law of Private Assistance, Human Development and Social Development Institutions of the State of Oaxaca.

    Finally, there are the institutions that grant scholarships, which include formal education, as long as the beneficiaries are selected through a public competition (Article 98, LISR).

    If an authorized donee that grants scholarships were to be sold, it should proceed along the same terms as those for the donee described in Article 97, LISR).

      Procedure for requesting authorization to receive income tax deductible donations

    Local legal administration for the foundation’s registered address is the office where the application for authorization to issue receipts for donations that are tax deductible is processed. In the case of IAPs, the Committee is the agency that holds the proceedings.

    It should be pointed out that the documentation attached to the request for authorization: letter of application; the institution’s articles of incorporation; a copy of its Federal Taxpayer Identification Number; a document of legal representation; evidence of the activities it carries out; if the case, the SEP or CONACYT registry number, or agreement(s) of collaboration with a government or charity agency, if any.

    Once the Department of Treasury grants its authorization, it only needs to be published in the Federal Official Gazette. Meanwhile, the institution can print the numbered receipts for donations with the information required by Federal Tax Code Regulations (Article 40).

    2. Exemption from other taxes

    Authorized donators can avoid paying Value Added Tax, Customs Duty, Property Tax and Water Tax.

      A. Value Added Tax (VAT)

    Donations and property transfer mortis causa do not pay said tax (Article 8, paragraph 2, LIVA). Hence, non-profit organizations generally do not inform the Treasury of said tax, since they issue receipts of donations, unless they render paid services or sell products.

    Nor do they pay VAT: rendering teaching services in schools with official study programs overseen by the Department of Public Education (Article 15, IV), or scientific, political or cultural activities led by non-profit organizations (Article 15, XII, e), LIVA).

    Here we should also consider the exemption of VAT when donated goods are imported —to authorized institutions— by residents abroad (Article 25, IV, LIVA).

      B. Customs Duty

    Here we can include authorized donees —IAPs or non-profit associations— that do not pay this tax for importing or exporting merchandise:

      IX. Whatever is donated for cultural, teaching, research, public health or social service purposes, imported by public bodies, as well as non-taxpaying legal entities authorized to receive donations that are deductible from Income Tax, as long as they comply with the following requirements:

      a) That they be part of their patrimony.

      b) That the donor be a non-profit institution or a foreign public entity.

      c) That they have Department of Treasury authorization.

      d) That, if the case, the other obligations in terms of tariff-free regulations and restrictions are complied with (Article 61 of the Customs Law).

      C. Property and Water Tax

    Certain state municipalities exempt non-profit institutions from paying these taxes. In the case of the Federal District, they receive a subsidy in water payments, through an agreement celebrated with the Federal District government.

    3. Tax obligations

    Charity institutions have specific tax obligations.

      A. Accounting

    Naturally, non-profit institutions should have some kind of accounting system (A. 101, I, LISR). They can opt for any manual bookkeeping, mechanized or electronic system, that is, with magnetic devices (Articles 28, CFF; 27, RCFF; 86, I, LISR) and record income and expenses, investments and deductions, as well as the goods and debts related to the corresponding supporting documentation in a page-numbered ledger (Article 32, RCFF, related to Article 71, RLISR).

      B. Annual Tax Return

    By law, February 15th is the day when these institutions need to present their annual tax return to the Treasury (Article 10, II, paragraph 2; Article 86, VI, 101, Section III, and 101, paragraph 3, LISR). In this tax return, the income in the fiscal year is determined, as is their total, the authorized deductions and the distributable residue which is taxed.

    There are certain items or concepts on the distributable residue that must be declared to the Treasury and the corresponding tax must be paid. These refer to:

      The amount of oversights of income or the purchases that were not made and unduly recorded.

      The expenditures that are made and that are not deductible according to the terms of Title IV of this Law (that is, that do not fulfill the requirements of the permitted deductions) (Article 95, last paragraph, LISR).

    This means that if there are purchases that cannot be verified or expenses that by law are not Income Tax deductible included in the a non-profit institution’s records of profits, taxes must be paid.

    Payment must be made on February 15th of the year after it has been determined and it will be considered definite tax. The taxes to be paid are calculated by applying the current rate of 32% on the established distributable residue (Article 95, last paragraph, in reference to Article 177, LISR).

      C. Information Returns

    IAPs must present information on the donations they may have given in the previous year every February (Article 86, IX, b), LISR).

      D. Public Access Information

    The institutions authorized to receive donations should have the following information available to the public, at the address for tax purposes and during regular office hours:

    • The documents presented to the Treasury for which it obtained authorization to receive deductible donations from said government agency.

    • The simplified tax certificates and the annual tax returns for the last three years.

      D. Obligations regarding Employees

    Institutions with employees must be members of the IMSS, INFONAVIT and the SAR and must make the corresponding payments.

    Furthermore, institutions that have fulfilled the above-mentioned requirements can request authorization to issue receipts deductible in the United States of America, for purposes of the taxes to be paid on the income obtained in Mexico.

    4. Agreement to Avoid Double Taxation between Mexico and the United States of America

    The Agreement to Avoid Double Taxation and Prevent Tax Evasion in terms of Income Tax, celebrated between Mexico and the United States of America entered into force on January 1, 1994.

    According to said agreement individuals or corporations residents of either country can deduct income tax when donations are given to organizations dedicated exclusively to charity, religious, literary, scientific and educational purposes and when they are residents of the other country. Only those institutions authorized by the LISR as exempt donees can receive income tax deductible donations.

    Therefore, according to this agreement, the non-profit institutions residents of Mexico that are authorized by the LISR to receive income tax deductible donations have been empowered to receive donations from individuals, residents in the United States of America. These donations can be income tax deductible in said country (and vice versa) from any income obtained in Mexico.

    On the other hand, Mexican and US tax authorities have established that the institutions authorized to receive donations deductible in the United States of America are those that operate under identical rules to those of US public charities. Moreover, Article 17 of the protocol of said agreement states that the provisions of Article 70 B of the LISR are equivalent to Section 509 (a) (1) and (2), except for religious organizations described in Section 170 (b) (1) (A) (i).

    There are other statutes that apply to IAPs that should not be left out, such as omnibus tax rulings in which the applicable rules for authorized donees are established each year (Rules 3.13, 1 to 3, 14.4); the rules on the obligation IAPs have to obtain certification for their financial reports from an authorized public accountant according to Article 32-A, Section II of the Federal Tax Code; Annex 1 regarding the official forms approved for each year —as in the year 2000, for example— to present the corresponding tax returns (DOF, 8.03.99). Of special interest for the altruistic sector are: a) the annual income tax return for non-profit corporations (Form SIR-71); b) the multiple notification for the donation of merchandise that has lost value (Format 45).

    XV. OTHER CONSIDERATIONS

    We have already pointed out that in order to amend the law on this matter, legislators have delimited the scope the purpose of both associations and foundations must have, by pointing out that they are to be only aimed at social assistance, which includes “activities for the promotion, welfare, prevention, protection and rehabilitation” of individuals or groups of the population that are physically, mentally, legally or socially unprotected (Article 2, LIAPDF).

    Therefore, private assistance institutions should act without the intention of obtaining profits and without designating individual beneficiaries (Article 1, LIAPDF).

    Since foundations pursue a noble purpose to benefit society, legislators consider them of public utility, privileging them with exemptions, subsidies and administrative powers (Article 4, LIAPDF).

    We reiterate the irrevocable nature the affected goods acquire for the purpose stipulated by the founder (Article 9, paragraph 3, LIAPDF); while acts of charity (piæ causæ) done by an individual or corporation, exclusively with funds of its own, are not subject to this law (Article 5, LIAPDF).

    The formalities established by law for the establishment or endowment of goods are not unquestionable, which is why a flaw in structure will not bring about its annulment, so that the testator’s wishes are respected in any case (Article 12, LIAPDF).

    By law, the Private Assistance Committee must carry out a strict and detailed control of the board of trustees’ behavior (Articles 44, 45, XVI, 71 and 72, LIAPDF).

    XVI. CONCLUSIONS

    A few final thoughts on this concept of old-school ancestry and promising future.

    Before becoming an institution under civil law, foundations come from a category created by general law theory.

    This allows us to place “corporations” (associations and societies) under the definition of legal persons. And their typification is included in basic legal concepts. Hence, the structures —corporations and foundations— form categories studied by general legal theory.

    The constitutive elements of a foundation (patrimony, specific purpose imposed by the founder, as well as indications as to how it is to be administrated and State approval of its bylaws) reveal that it is a unilateral legal business, typical in civil law.

    There is duplicity in the general interest in foundations that must be kept in mind: on one hand, there is the interest of the person who decides to establish a foundation, and on the other, the interest of the activity said institution carries out.

    The analysis of the operations of the foundation structure arises from one premise: every foundation implies capital.

    The entailment of patrimony to a purpose, that is, stable and voluntary allotment of capital to a specific purpose, is a characteristic of this institution.

    The impersonal ownership of the patrimony in foundations represent another special characteristic.

    Sufficient capital, stability and its guarantee, the general purpose, as well as the organization, also require the need of regulatory guarantees.

    In both the concept of societies and foundations, there is tension and dynamics working towards an end, with two poles of interaction that coincide: capital and activities. What happens is that the direction of this tension and the dynamics go in opposite directions: tension and subordination of the dynamics of activities heading towards capital in a society, and tension and the subordination of capital for a foundation’s activities.

    As pointed out at the beginning of this essay, the gradual diversification into other purposes of a general nature: cultural, educational, artistic (the fitting and proper explanation of which have been approved) lead us to think of its application to purposes of a general nature, as already occurs in Germany and Switzerland, while not specifically altruistic or cultural, but ones other than economic ones. In such cases the selective criterion of the formula (it must be stressed that foundations are not good for everything) is the importance, stability and preponderance of the purpose pursued over material instruments (capital) made apparent by their presence.

    Liberal political philosophy accepts public charity as the only purpose foundations may justify.

    Finally, the foundation structure implies, due to its characteristics of separation with interested and private subjectivity, stability, the rationality of the supremacy of the object over randomness of decision and fragmented participation, even with the abstraction of public interest that has freely and willingly been pursued, a series of advantages derived from its own identity and nature make it deserving of protection from the State’s legal, economic and tax system.

    Notes
    * Translated by Carmen Valderrama Ramos.
    ** Researcher at the Legal Research Institute of the UNAM.
    1 Bevilacqua, Clóvis, Resumodas Lições de Legislação Comparada sobre o Direito Privado, Bahia, Fonseca Magalhães, 1987, pp. 151 and 152. Along the same line of thought, see Ruggiero, R. de, Instituições de Direito Civil, trans. by Ary dos Santos, Sariva, 1934, Vol. I, pp. 430 and 451.
    *** In this document the corporation word is used in generic sense, i.e., concerning to legal entity (personality) in general.
    2 Fernández Hierro, J. M., “La fundación: somero análisis de la ley 12/1994 del Parlamento vasco”, E. D., Vol. 44/2, July-December 1992, p. 398.
    3 Idem.
    4 Ibidem, p. 399. In Spain, the case of “El Corte Inglés”, an important department store, is well known.
    5 Idem.
    6 Cfr. Santalucía, Bernardo, entry: “Fondazione”, E. D., t. XVII, G. E., 1968, p. 774. Italics ours. Heise, Grundris eines Systems des gem. Civilrechts, p. 25, quoted by Ferrara, F., Teoria delle persone giuridiche, 2nd. ed., Turin, UTET, 1923, p. 711; Savigny, Sistema del diritto romano attuale, trans. by A. Scialoja, Turin, 1886.
    7 E. Petit thinks differently, stating that not only foundations or piæ causæ, but their property too were considered as a corporation (artificial person) in Roman law. Tratado elemental de derecho romano, Mexico, Nacional, 1971, p. 164 (note 5).
    8 See Ferrara, op. cit., note 6, p. 38.
    9 Santalucía, op. cit., note 6. Italics mine.
    10 See Ferrara, op. cit., note 6, p. 39. One example of this kind of institution in Greek law is will of Teophrastus who wants his gardens to be used to found a school of philosophy. He therefore leaves it to ten of his friends, prohibiting them from ever changing the intended use of said patrimony. This did not happen because the school disappeared as of the second transmission of property transfer. However, Ferrara —basing himself on Kohler— points out that there was an abundance of autonomous foundations in the Oriental laws of the time, especially in Islamic law, in which founding a mosque is common.
    11 Idem; Santalucía, op. cit., note 6, p. 778.
    12 Badenes, G. R., Las fundaciones de derecho privado, Barcelona, Acervo, 1960, p. 15. Santalucía, op. cit., note 6, p. 779. Nosochomium: locus in quo aegroti homines curantur; Gerontocomium: ...in quo pauperes et propter senectute solam infirmi homines curantur; Brephotrophium: ...in quo infantes aluntur; Orphanotrophium: ...in quo parentibus orbati pueri pascuntur; Ptochium o Ptochtrophium: ...in quo pauperes et infirmi homines pascuntunr; Xenodochium: o venerabilis domus: ...locus venerabilis in quo peregrini suscipiuntur. Cossio, A. de, “Hacia un nuevo concepto de persona jurídica”, ADC, Vol. VII, July-September, MCMLIV, p. 633. Ferrara, op. cit., note 6, p. 39.
    13 “Les fundationes en Occident au Bas Empire”, RIDA, 1955, p. 282.
    14 Santalucía, op. cit., nota 6, p. 781.
    15 Ibidem, p. 782.
    16 Iglesias, Juan, Derecho romano. Instituciones de derecho privado, 6th ed., Barcelona, Ariel, 1972, pp. 166-168.
    17 One example of a foundation by specific testamentary liberality is that of Septimio Liberalis, who names Septimia Prisca as his heir, with the obligation of paying rent to the decurions of the city of Arimio. All of this information has been included by Cervantes, M., in Historia y naturaleza de la personalidad jurídica, Mexico, Cultura, 1932, pp. 270-272. Italics mine.
    18 Ferrara, op. cit., note 6, Nos. 19 and 20. The concept of institute appears in canon law to clearly refer to a new type of legal person, “that of an establishment created and regulated externally, by a superior free will, to reach an end, that forms a new ideal body (corpus mysticum)”. This right applies and spreads this concept to include all legal persons. Ibidem, No. 102.
    19 Ferrara, op. cit., note 6, pp. 69 and 710. Manuel Cervantes does not entirely share this idea since according to him: “It is undoubtable that the idea of foundations, considered as autonomous patrimony, was born within the scope of application of canon law. However, it did not originate in the legal statutes of ecclesiastic patrimony, but was an idea suggested by the founders themselves, always in their wish to ensure compliance with their free will and to safeguard the foundation’s goods against attack from the Church itself”. Moreover, according to him, there is no document whatsoever in Roman or Canon Law that supports this statement. Cervantes, Manuel, op. cit., note 17, p. 321.
    20 Saleilles, De la Personalité Juridique, 2nd ed., Paris, Rosseau & Co., 1922, pp. 125 and 126.
    21 Besta, Le persone nella storia del diritto italiano, Padua, CEDAM, 1931, p. 226.
    22 Ibidem, No. 21.
    23 See Roberto, Alberto de, in: “Fondazione di culto”, E. D., Turin, G. E., 1968, Vol. XVII, p. 817; Galindo Garfias, Ignacio, Estudios de derecho civil, Mexico, UNAM, Instituto de Investigaciones Jurídicas, 1981, p. 17. Giudice, Vicenzo del, Nociones de derecho canónico, trans. by Pedro Lombardía, 1955, p. 254. The formulas for creating a foundation that have been found in testaments are: “Voto et ordino quod unum hospitale fiat...cui lego. A volu et voeult ledit Jehn fonder et estorer, fonde et estore ung hospital”. Cfr. Lapradelle, Geouffre, Théorie et practique des fondations perpetuelles, Paris, 1895, p. 48. Based on the Code of Canon Law, the administration of goods consists of three acts: a) its conservation and improvement; b) the perception and conservation of the proceeds; c) their due application to the purposes for which they were destined.
    24 Ferrara, op. cit., note 6, No. 20. According to Canon Law, on establishing the administration of charity institutions grants them legal personality and the faculty to own and administrate church goods. Moreover, it also states: “In the instrument of foundations the pious founder will contentiously entrust the comprehensive establishment of the institution, the purpose, the endowment, the administration and system, the use of the revenue and the succession of the goods in the event the institution comes to an end”.
    25 This statement was made by Vauthier, Etudes sur les Personnes Morales, pp. 74 and 75.
    26 Ferrara, op. cit., note 6, No. 78; Romanelli, Vicenzo Maria, Il negozio di fondazione nel diritto privato e nel diritto pubblico, Napoli, Dott. Eugenio Jovene, 1935, p. 82, respectively.
    27 Ferrara, op. cit., note 6, p. 407.
    28 Romanelli, op. cit., note 26, p. 82.
    29 Ferrara, op. cit., note 6, p. 408. Article 2 of the Italian Civil Code once stipulated: “Communes, provinces, civil public institutions, church institutions, and all legally recognized moral entities in general are considered legal identities and shall benefit from civil rights according to law and the common practices observed as a persons public right”.
    30 Ferrara, op. cit., note 6, p. 409.
    31 Cfr. Romanelli, op. cit., note 26, p. 81. Regarding the influence of Roman-Canon doctrine in the Middle Ages and its acceptance by various nations, see Ferrara, op. cit., note 6, pp. 80 et seq., which stipulates State intervention only for corporations (pp. 87 et seq.).
    32 Cfr. Castro y Castro, F., Tópicos fundacionales, Mexico, Fundación Miguel Aleman, A. C., 1994, cited by Piñar Mañas, J. L. (dir.), Las fundaciones en Iberoamérica, régimen jurídico, Madrid, McGraw-Hill, 1997, p. 307.
    33 Lapradelle, Geouffre, op. cit., note 23, p. 12.
    34 Michoud, La Théorie de la personnalité morale, 3rd ed., Paris, LGDJ, 1932, Vol. I, No. 76.
    35 Bevilaqua, Clóvis, Código Civil, Rio de Janeiro, 1956, Vol. I, 169.
    36 Id., Teoria Geral do Direito Civil, 2nd ed., Rio de Janeiro, Livraria Francisco Alves, 1929, pp. 158 and 159.
    37 Lasarte, C., “Dotación patrimonial e irreversibilidad de los bienes fundacionales”, Boletín de la Facultad de Derecho (UNED), Madrid, 2nd Epoch, No. 4, summer-autumn 1993.
    38 Lehmann, Tratado del derecho civil, parte general, trans. by José M. Navas, Revista de Derecho Privado, 1956, p. 658.
    39 Del Vecchio, Lezioni di Filosofia del Diritto, 9th ed., Milan, Giuffrè, 1953, p. 277. This author was inspired by what Michoud stated (op. cit., note 34.) on pointing out that the word “foundation, in a general sense, allots perpetual encumbrance of goods for a specific purpose”.
    40 Badenes, op. cit., note 12, p. 255; italics mine. Rico Perez (Las fundaciones en la Constitución española, Toledo, 1982, pp. 54 et seq.) conceives it as “those autonomous patrimony, organized and allotted by the founder, for the pursuit of a permanent and lawful general purpose, is administrated as a non-profit organization in the manner of a company by people who are responsible for its governance, according to the statute of limitations in the bylaws and that, legally constituted, shall enjoy legal personality”.
    41 Rossell, V. and Mentha, H., Manuel du Droit Civil Suisse, Vol. I, No. 258, p. 171. “Organizations of a political, religious, scientific, artistic, benevolent, recreational or other nature which do not serve a commercial purpose acquire legal personality upon the expression in their statutes of a desire to organize themselves cooperatively” (Article 60, SCC).
    42 Law No. 87-571, July 23, 1987, in J. O., 119th year, No. 169, p. 240.
    43 BOE, No. 282, November 25, 1994, p. 3273. “A foundation is a non-profit organization established by the assignment of one or more goods in order to carry out religious, benevolent, cultural or other recreational interests” (Article 99, CC, Peru).
    44 Official Gazette for the Federal District, December 14, 1998. One concept of foundations based on Mexican legislation can be seen in Sánchez Medal, R., De los contratos civiles, 3rd ed., Mexico, Porrúa, 1976, No. 191, p. 332; Pina Vara, Rafael de, in: “Fundación”, Diccionario de derecho, 3rd ed., Mexico, Porrúa, 1973, p. 188. The Civil Code for the State of Guerrero states: “Foundations shall be legal persons established by means of assignment private property for purposes of assistance, education or cultural aims” (Article 2861).
    45 Romanelli, op. cit., note 26, p. 14. This division of legal persons into corporations and foundations is common practice; Del Vecchio, op. cit., note 39, p. 286.
    46 For those who do not consider cooperative associations a type of business corporation (Article 1, VI, LGSM) it would represent, in this case, one more figure.
    47 See Galindo Garfias, Ignacio, op. cit., note 23, p. 16.
    48 García Máynez, Eduardo, Lógica del concepto jurídico, Mexico, Fondo de Cultura Económica, 1959, p. 180; Ferrara, op. cit., note 6, p. 137.
    49 Messineo, F., Manuale di diritto civile e commerciale, Milan, G. E., 1947, p. 165.
    50 Court criteria confirm the nature of mercantile agreements: Fiduciary transaction, Origin of. The transaction involving the creation of a trust is a complex form resulting from the merger of two different types of businesses with different effects: a) a comprehensive real contract, the property transfer, which is done categorically and irrevocably, and b) a limited mandatory contract by which the trustee is obligated to use the acquired right in a certain manner. SJF, 6th Epoch, Vol. XXXVIII, 3rd Chamber, p. 225. A. D. 1627/60. Hermenegildo Moreno González. August 24, 1960; 5th Epoch, Vol. CV, p. 2047. A.AR/4572/48. Financiera de Construcciones. August 31, 1950; Trust. 5th Epoch, Vol. CVIII, 4th Chamber, p. 1329. A:R:3308/50. Sosa García Efraín. May 8, 1951. Trusts. Are a legal transaction and not a corporation, its representation corresponding to that of a trust. 8th Epoch, Vol. XV-1, February, p. 187. A. R. 153/95 Nacional Financiera, SNC como fiduciaria de (Infotec). January 26, 1995.
    51 Rodriguez Rodriguez, J., Curso de derecho mercantil, Mexico, Porrúa, 1947, Vol. II, p. 531; In the same direction, see Barrera Graf, Jorge, Estudios de derecho mercantil, Mexico, Porrúa, 1958, p. 317. For the Court’s opinion on this, see: Trust. Nature of. 7th Epoch, Vol. 21, Seventh part, Ancillary Chamber, p. 39. A. D. 3176/65. Elvira Rascón de Macín and co-claimants. September 22, 1979. 1986 Report, Plenary, p. 675. A. R. 769/84.
    52 Ferrara, op. cit., note 6, No. 105.
    53 Ibidem, No. 107.
    54 Cfr. Centro Mexicano para la Filantropía, La filantropía en México: diagnóstico y propuestas, quoted by Consuelo Castro Salinas, in Piñar Mañas, J. L. (dir.), op. cit., note 32, p. 300.
    55 Meinberg, G. H., “Da naturaleza jurídica das fundações”, Justitia, Brazil, Vol. 72, Year XXXIII, 1971, p. 64.
    56 Messineo, op. cit., note 49, p. 168.
    57 Nart, “La fundación”, Revista de Derecho Privado, Madrid, 1961, p. 495.
    58 In 1932, Manuel Cervantes indicated the existence of a sole procedure for founding, independently from the accidental forms with which foundations are endowed (Historia y naturaleza de la personalidad jurídica, Mexico, Cultura, 1932, pp. 447 and 448). This procedure is always a legacy or donation sub modo (under specific provisions) (essential legal characteristics) made to the people, since founders want to benefit this group by relinquishing their goods. But said transfer is not carried out so easily, but with the onus or method that said goods are directly aimed at the purpose specified by the founder. Therefore, the government, as the people’s representative, can accept the donation or legacy under specific provisions, but once accepted, the fate of said goods must not change. If it is changed, then the right of return can be applied, not as an exception, but by an express legal order. A modal transfer or non-independent foundation is an insecure business since it is based on the existence of an obligor, this person can be remiss or not comply with the stipulations. Cfr. Nart, op. cit., note 57, p. 491.
    59 Del Vecchio, Lezioni di filosofia del diritto, 11th revised ed., Milan, Giuffrè, 1962, pp. 286 and 287. As to the elements, see supra note 52.
    60 Fernández Castelló, J., Las fundaciones de beneficencia privada, Mexico, 1897, p. 49.
    61 In the matter, see Lapradelle, op. cit., note 23, p. 448. For a legal person to exist, elements of a substantial nature (a collection of persons or goods and patrimonial autonomy), and the formal element, that is, legal recognition, must be consolidated.
    62 Cfr. Sánchez Medal, op. cit., note 44, p. 332.
    63 Badenes, G. R., op. cit., note 12, p. 68.
    64 See Articles 80-88 of the German Civil Code; Articles 52, 80-89, 393.4, 408, 470, 493, 503, 539, paragraph 2 of the Swiss Civil Code; Articles 12, 14, 15, 16, 17, 25-32, 34 and 35 of the Italian Civil Code; and Articles 24 to 30 of the Brazilian Civil Code.
    65 Puig Peña, F., Tratado de derecho civil español, Tome I, Vol. IV, Madrid, Revista de Derecho Privado, 1946, p. 132.
    66 Idem.
    67 Idem. The French-Italian Code of Obligations project by regulating unilateral promises as sources of obligations, stated —as to this study— all the rules for contracts, except —clearly— those regarding the agreement of the minds. This project would require two conditions: 1) that the promise be made in writing; 2) that its term not be indefinite; Planiol (with the collaboration of Ripert), Traité élémentaire de droit civil, 11th ed., Paris, LGDJ, vol. II, No. 834, 1932. For Branca (in Scialoja e Branca, Commentario del Codice Civile, Libro Cuarto: Delle Obbligazioni, Roma, Zanichelli-SEFI, 1966, p. 354), it does not have true obligatory effects of its own. Also see, Messineo, op. cit., note 49, Vol. III, paragraph 164 (note 4), paragraph d), and Vol. II, paragraph 20 (note 7).
    68 Rosshirt discussed the contract with the foundation to be established; while Brinz and Pfeifer said that the contract is made with the State as the representative of the foundation that was to be created... This conception is analogous to that of the pious foundation that at a time was stipulated in Canon Law: Fundatio legitime acceptata, naturam inducit contractus synallagmatici “do ut facias” (The legitimately accepted foundation comes from a mutually binding contract: I give so that you may do in Canon Law. Miguélez Dominguez, Lorenzo et al., Código de derecho canónico, Madrid, BAC, MCMLVII; also cfr. Romanelli, Vicenzo Maria, op. cit., note 26, p. 88.
    69 Quoted by Romanelli, op. cit., note 26, p. 89.
    70 See Enneccerus, Ludwig et. al., Tratado de derecho civil, trans. by Antonio Hernández Gil, Barcelona, Bosch, 1955, p. 276, among others.
    71 Ferrara, op. cit., note 6, p. 792; Coviello, Manuale di diritto civile italiano, 3rd ed., Milan, SEL, 1924, p. 219.
    72 Romanelli, op. cit., note 26, p. 89.
    73 Ibidem, p. 91.
    74 Quoted by ibidem, No. 12.
    75 Idem.
    76 Siegel’s renown work was Das Versprechen als Verpflichtungsgrund, Berlin, 1863; cfr. ibidem, p. 93. Siegel has been attributed as being the first to develop this theory. Meanwhile, in France, René Warms wrote the classic work on will in 1891, cfr. Busso, Código Civil anotado, Buenos Aires, Ediar, 1944-1951, Vol. III, pp. 88 and 89.
    77 Romanelli, op. cit., note 26, p. 94.
    78 Ibidem, p. 98. The Mexican LIAPDF does not include foundations other than those established by wills or by donations. Foundations inter vivos made in the form of a donation does not lose the legal nature of a unilateral act because, precisely as Coviello observes, laws do not require acceptance. Foundations inter vivos, however, do require the form of a public act. Coviello, op. cit., note 71, p. 218.
    79 Romanelli, op. cit., note 26, p. 98. All acts of self-commitment —according to Behrend— are unconditionally unilateral legal businesses (acts). But not all unilateral legal businesses (acts) are acts of self-commitment. Cfr. Romanelli, op. cit., in this same note.
    80 This does not occur in German law in which the right of revocation by the founder or his heirs is admitted for both foundations inter vivos and mortis causa and in the latter case with very restricted limits. Ibidem, p. 99.
    81 Idem.
    82 Ibidem, p. 100.
    83 Idem. In a holographic will, as is known, the simplicity of formalities corresponds to an inflexible strictness in observing it.
    84 Scialoja, “La dichiarazione unilaterale di volontá come fonte di obbligazione”, Saggi di diritto, Roma, SEFI, 1927, Vol. I, p. 60.
    85 Romanelli, op. cit., note 26, p. 101.
    86 Scialoja, “La dichiarazione...”, cit., note 84, pp. 59 and 60.
    87 Baudry-Lacantinerie, Précis de Droit Civil, 7th ed., Paris, Librairie de la Société du Recueil Gal des Lois et Desarrets, 1899-1900, Vol. I, No. 790.
    88 Josserand, Cours de droit civil..., 2nd ed., Paris, Recueil Sirey, 1933, Vol. II, p. 205. Demogue, Geny, Colin and Capitant and von Tuhr agree with said criterion.
    89 Coviello, N., Manuale di diritto civile italiano, parte generale, 4th ed., Milan, SEL, 1929, No. 102.
    90 Barrera Graf, Jorge, Las sociedades en derecho mexicano, Mexico, UNAM, 1983, p. 190.
    91 Fuentes Torres, I., “Elementos reales del fideicomiso”, in various authors, Las instituciones fiduciarias y el fideicomiso en México, Mexico, Banco Mexicano Somex, MCMLXXXII, p. 191.
    92 Sánchez Medal, op. cit., note 44, p. 332.
    93 Borja, Teoría general de las obligaciones, 14th ed., Mexico, Porrúa, 1995, No. 538, for negotiable instruments No. 578; Rojina Villegas (Derecho civil mexicano, 7th ed., Mexico, Porrúa, 1998, Tome V, Vol. I, p. 439) upholds the general nature of this source, although he believes the theory held by Borja is prevalent in Mexico. R. de Pina (Elementos de derecho civil mexicano, 13th ed., Mexico, Porrúa, 1993, pp. 67, 68 and 69) and Gutiérrez y González (Derecho de las obligaciones, 8th ed., Mexico, Porrúa, 1991, No. 479) follow the theory upheld by Rojina. Gutiérrez, in terms of negotiable instruments, states that “the law alone (sic) and the material conduct on subscribing stock, are what make the obligation arise and not a unilateral declaration of will” (No. 513).
    94 Rojina Villegas, op. cit., previous note. Rojina does not indicate the year of the Private Assistance Law. It might be Article 51 of that of January 28, 1926, since that of 1943 does not include the two premises in Article 21 to which the author refers.
    95 It is thus considered by Rojina Villegas, Compendio de derecho civil, 25th ed., Mexico, Porrúa, Vol. II, p. 363.
    96 Mantilla Molina, Títulos de crédito cambiarios, Mexico, Porrúa, 1977, p. 32.
    97 Lacour et Bouteron, Précis de droit commercial, 2nd ed., Paris, Dalloz, 1921-1924, Vol. I, Nos. 1071 and 1121; and Vol. II, Nos. 1287 and 1288. This author follows the school of Einer and Kuntz.
    98 Romanelli, op. cit., note 26, p. 12.
    99 Ibidem, p. 103.
    100 In Rome, the condicio juris was a requirement imposed by law for a transaction’s validity. The condicio juris differs from condicio facti only because the subordination of the effects of the business conditioned to a future event is determined by law, more than by the wills expressed in the business (act). The condicio juris works similarly to the voluntary condition; Oertmann, cit. by ibidem, p. 106.
    101 Idem.
    102 It is not about a concession or an authorization, as held by the prevailing doctrine. Authorization, as is known, is understood as a measure by which an administrative authority, taking into account the circumstances though which attempts to explain a material activity, or if a specific entity wants to make a declaration of will, it removes the limitations the law had placed on the free expression of this activity or of said declaration of will. Ranelletti, quoted by ibidem, p. 108. For Fiorini (“Noción fundamental de la concesión, la autorización y el permiso”, RDAM, Buenos Aires, 1944, 1070), it is the administration’s recognition of an individual able to carry out an activity of public necessity. In the case of foundations, the individual has already exercised the power by issuing the act. The German code and doctrine speak of approval. Approvals, however, are not true acts of will in themselves, but simply a verification of the existence of the conditions allowed for certain acts, and therefore are not integrated with authorizations. Fiorini, op. cit., in this same note.
    103 Forti, Diritto ammnistrativo, Naples, Casa Editrice DEJ, 1947, Vol. II, pp. 109 et seq.
    104 Karlowa, “Zur Lehre v. der jurist. Personen”, Zeits. f. das privat und offentl. Recht, Vol. XV, pp. 403 et seq., quoted by Badenes, op. cit., note 12, p. 110; and García Máynez, Eduardo, Introducción al estudio del derecho, 8th revised ed., Mexico, Porrúa, 1958, p. 293. Italics mine.
    105 Auriti, Giornale Delle Leggi, Vol. IX, No. 1, cited by Badenes, op. cit., note 12, p. 110.
    106 Romanelli, op. cit., note 26, p. 109.
    107 Cfr. Pierson, Donald, Teoria e Pesquisa em Sociologia, 18th ed., Melhoramentos, 1981, pp. 151-156.
    108 Messner, Johannes, Ética social, política y económica a la luz del derecho natural, Madrid, 1978, p. 239.
    109 Larenz, Karl, Derecho civil, parte general, Madrid, Revista de Derecho Privado, 1978, p. 239.
    110 García Máynez, Eduardo, Lógica del concepto jurídico, Fondo de Cultura Económica, 1959, pp. 157 et seq.
    111 Cfr. id., Teoría general del derecho, 16th ed., Mexico, Porrúa, 1969, p. 290.
    112 Cfr. Regarding this see Piñar Mañas and García García, op. cit., note 32, pp. 324 et seq.
    113 Organizations like: Organismo Mexicano Promotor del Desarrollo Integral de los Discapacitados Visuales (IAP); Fundación Mexicana para la Rehabilitación del Enfermo Mental; Fundación Teletón, which collects millions of pesos every year to build rehabilitation centers for Mexican children in Mexican states. The “Vamos México” Foundation was established on September 24, 2001 as a non-profit organization, and not precisely as a private assistance institution.

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