Legal foundation and governing framework
- Section 34(H) of the NIRC, as amended by Republic Act No. 8424 (the “Tax Reform Act of 1997”), allows deductible business expenses for charitable contributions to accredited donee institutions, subject to rules and regulations of the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue.
- Accreditation mechanisms were initially established through a Memorandum of Agreement signed on January 29, 1998 between the Philippine Council for NGO Certification (PCNC) and the Department of Finance (DOF).
- Formal rules for accreditation were implemented through Revenue Regulations No. 13-98, issued by the BIR on December 8, 1998.
- Executive Order No. 720 modifies the earlier framework under Executive Order No. 671, issued on October 22, 2007.
PCNC as accrediting entity and duties
- Section 2 designates the PCNC—registered with the Securities and Exchange Commission (SEC)—to act as the government partner in a system of accreditation for donee institutions.
- Section 2 requires the PCNC to determine the qualification of domestic corporations, associations, or NGOs organized and operated exclusively for the following purposes: religious, charitable, scientific, youth and sports development, cultural, educational, or rehabilitation of veterans, or for accreditation as donee institution for NGOs.
- Section 2 prohibits the PCNC from processing any corporation, association, or NGO for accreditation unless it has secured a valid registration with the government agency that exercises regulatory function over such entity.
- Section 2 mandates that the PCNC comply with existing DOF/BIR standards and guidelines for accreditation of non-stock, non-profit corporations/NGOs under Revenue Regulations No. 13-98.
- Section 2 further requires the PCNC to be guided by standards and guidelines of other government departments or agencies exercising regulatory functions over such corporations/NGOs, including the Department of Social Welfare and Development (DSWD).
- Section 2 requires the PCNC to submit to its Board of Trustees periodic reports of its operations, particularly receipts and expenses incurred in conducting its mandate as the government accrediting entity.
- Section 2 requires the PCNC, as a non-stock, non-profit entity, to comply with rules governing tax-exempt organizations, including the filing of an annual information return with the BIR.
Board of Trustees composition
- Section 3 provides that, in addition to its present membership that includes the DOF or BIR representative, the PCNC Board of Trustees must include the Department of Social and Welfare Development (DSWD).
- Section 3 allows other government representative/s to sit in the PCNC Board of Directors on a case-to-case basis, depending on the subject for deliberation.
Certification and final status issuance
- Section 4 states that the responsibility for granting certification for donee institution status remains with the Department of Finance, specifically the BIR.
- Section 4 requires the BIR to issue a Certificate of Registration as Qualified Donee Institution.
Implementing rules and regulations
- Section 5 requires the DOF, through the BIR, to issue the necessary rules and regulations to implement Executive Order No. 720.
- Section 5 requires issuance in coordination and consultation with the concerned government agencies.
Transitory treatment of existing donees
- Section 6 provides that corporations, associations, and NGOs granted Qualified Donee Institution status prior to the issuance of Executive Order No. 720 remain Qualified Donee Institutions until the expiration stated in their respective Certificate of Registrations.
Repeal, separability, and effectivity
- Section 7 repeals Executive Order No. 671 (issued October 22, 2007) and all executive orders and administrative issuances inconsistent with Executive Order No. 720, with inconsistent issuances deemed repealed, amended, or modified accordingly.
- Section 8 contains a separability clause: if any portion is declared unconstitutional, the remaining provisions remain in force.
- Section 9 establishes that Executive Order No. 720 takes effect fifteen (15) days after publication in two (2) newspapers of general circulation.