Philippine Council for NGO Certification

June 19, 2009 BIR RULING [DA-(CSI-020) 309-09] E.O. 720 Philippine Council for NGO Certification 6/F SCC Building, CFA-MA Compound 4427 Interior Old Sta. Mesa Road Sta. Mesa, Manila Attention: Ms. Fely I. Soledad Executive Director Gentlemen : This refers to your letter to Secretary Margarito B. Teves, dated August 11, 2008, requesting the Department of Finance to allow PCNC to adopt interim measures to expedite the certification of NGOs applying for donee institution status while the new implementing guidelines of Executive Order (E.O.) No. 720 have not been issued yet, to wit: A. Applications of Department of Social Welfare and Development (DSWD)-registered NGOs be processed immediately, even before the release of the implementing guidelines; B. Organizations whose mandate clearly fall under the DSWD be enjoined to register with DSWD before submitting their application to PCNC; and C. Certificate from the SEC be accepted as fulfillment of the registration requirements for (1) organizations under the jurisdiction of other government agencies that as yet have no clear, simplified registration process, (2) those whose primary purposes are covered by multiple government bodies and thus need to be ascertained further, and (3) agencies that do not fall under any of the two categories mentioned. As represented, due to the issuance of E.O. 671 which designated government agencies to be accrediting entities that will certify and accredit NGOs as donee-institutions, PCNC's function of certifying not-for-profit institutions as donee institutions had to stop. Consequently, the processing of applications including renewal of certification was put on hold. As such, members of the NGO community became uncertain of their status, thus affecting their enthusiasm and zeal in pursuing work for the poor. With the gravity of the situation, E.O. 720 which established a government-nongovernment partnership in the accreditation of donee institutions, could not have come at a better time. If it had been delayed some more, PCNC would have experienced a downsizing in the efforts of the community to help the poor. aEcDTC Under E.O. 720, PCNC could only process applications for donee status from organizations that are registered by appropriate government agencies, i.e. , those that have regulatory functions over their primary purpose, e.g. , DSWD for social welfare, Department of Education (DepEd) for education, National Commission for Culture and the Arts (NCCA) for the arts, etc. Of the agencies tasked to do the initial registration, it would seem that only DSWD is well-informed of this requirement. The others will still have to be informed or reminded of this obligation. Given this situation, the processing of application will surely take time. Meanwhile, NGOs, particularly those seeking certification, will have to suffer additional delay in their effort to provide donors incentive via tax deductibility. Any further delay in the processing of certification and registration of NGOs applying for donee institution status will adversely affect the delivery of basic social services which are badly needed at this time. Hence, this request. In reply, please be informed that this Office suspended the processing of applications for donee institution status on November 15, 2007 in view of E.O. 671. However, since the effectivity of E.O. 720, this Office has resumed the processing of said applications and continues to process applications of DSWD-registered NGOs even pending the amendment to Revenue Regulations No. 13-98. As discussed in previous meetings with the concerned government agencies, it has been agreed that prior to accreditation by PCNC, the concerned government agency shall determine the qualification of the NGO for accreditation as qualified donee-institution. As embodied in the draft Revenue Regulations amending Revenue Regulations No. 13-98, now pending with the Office of the Commissioner, newly-organized and existing NGOs shall apply with the concerned government agency for accreditation and submit to a process of examination and evaluation in accordance with the concerned agency's registration requirements and procedures. Since each government agency has its own registration requirements and procedures, they will have to draft their own implementing rules and regulations (IRR). It is our understanding that DSWD has its own registration requirements and procedures in place precisely why this Office processes applications of DSWD-registered NGOs. On the other hand, this Office poses no objection to your proposal that SEC Certificate of Registration be accepted as fulfillment of the registration requirements for (1) organizations under the jurisdiction of other government agencies that have no clear and simplified registration process yet, (2) those whose primary purposes are covered by multiple government bodies and thus need to be ascertained further, and (3) agencies that do not fall under any of the two categories mentioned provided that this is without prejudice to the review and approval thereof by the proper accrediting government agency in case of No. 1 and 2. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. cDAISC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service